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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)    

ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 30, 2016

or

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to          

Commission file number 1-16097

TAILORED BRANDS, INC.
(Exact Name of Registrant as Specified in its Charter)

Texas
(State or Other Jurisdiction of
Incorporation or Organization)
  47-4908760
(IRS Employer
Identification Number)

6380 Rogerdale Road
Houston, Texas

(Address of Principal Executive Offices)

 

77072-1624
(Zip Code)

(281) 776-7000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class   Name of each exchange on which registered
Common Stock, par value $.01 per share   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý.    No o.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o.    No ý.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý.    No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý.    No o.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a
smaller reporting company)
  Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o.    No ý.

The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the closing price of shares of common stock on the New York Stock Exchange on August 1, 2015, was approximately $2,874.2 million.

The number of shares of common stock of the registrant outstanding on March 18, 2016 was 48,449,454.

DOCUMENTS INCORPORATED BY REFERENCE

Document   Incorporated as to
Notice and Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held June 16, 2016
  Part III: Items 10, 11, 12, 13 and 14

   


Table of Contents


FORM 10-K REPORT INDEX

10-K Part and Item No.
  Page No.  

PART I

 

 

       

Item 1.

 

Business

    3  

Item 1A.

 

Risk Factors

    15  

Item 1B.

 

Unresolved Staff Comments

    28  

Item 2.

 

Properties

    29  

Item 3.

 

Legal Proceedings

    30  

Item 4.

 

Mine Safety Disclosures

    30  

PART II

 

 

   
 
 

Item 5.

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

    31  

Item 6.

 

Selected Financial Data

    33  

Item 7.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

    35  

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

    55  

Item 8.

 

Financial Statements and Supplementary Data

    57  

Item 9.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    109  

Item 9A.

 

Controls and Procedures

    109  

Item 9B.

 

Other Information

    111  

PART III

 

 

   
 
 

Item 10.

 

Directors, Executive Officers and Corporate Governance

    111  

Item 11.

 

Executive Compensation

    111  

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

    111  

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

    112  

Item 14.

 

Principal Accounting Fees and Services

    112  

PART IV

 

 

   
 
 

Item 15.

 

Exhibits, Financial Statement Schedules

    112  

Table of Contents

Forward-Looking and Cautionary Statements

Certain statements made in this Annual Report on Form 10-K and in other public filings and press releases by the Company (as defined below) contain "forward-looking" information (as defined in the Private Securities Litigation Reform Act of 1995) that involves risk and uncertainty. Forward-looking statements reflect our current views regarding certain events that could affect our financial condition or results of operations and may include, but are not limited to, references to, future sales, comparable sales, margins, costs, number and costs of store openings, closings and expansions, earnings, profitability, capital expenditures, potential acquisitions, synergies from acquisitions, demand for clothing, market trends in the retail and corporate apparel clothing business, currency fluctuations, inflation and various economic and business trends. Forward-looking statements may be made by management orally or in writing, including, but not limited to; in Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K and other sections of our filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended and the Securities Act of 1933, as amended.

Forward-looking statements are not guarantees of future performance and a variety of factors could cause actual results to differ materially from the anticipated or expected results expressed in or suggested by these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to: actions by governmental entities; domestic and international macro-economic conditions; inflation or deflation; success, or lack thereof, in executing our internal strategic and operating plans including new store and new market expansion plans and cost reduction initiatives; store rationalization plans; profit improvement plans; revenue enhancement strategies; the impact of opening tuxedo shops within Macy's stores; changes in demand for clothing; market trends in the retail business; customer confidence and spending patterns; changes in traffic trends in our stores; customer acceptance of our merchandise strategies; performance issues with key suppliers; disruptions in our supply chain; severe weather; foreign currency fluctuations; government export and import policies; advertising or marketing activities of competitors; and legal proceedings.

Forward-looking statements are based upon management's current beliefs or expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies and third party approvals, many of which are beyond our control. Please refer to "Risk Factors" contained in Part I of this Annual Report on Form 10-K for a more complete discussion of these and other factors that might affect our performance and financial results. Forward-looking statements are intended to convey the Company's expectations about the future, and speak only as of the date they are made. We undertake no obligation to publicly update or revise forward-looking statements that may be made from time to time, whether as a result of new information, future developments or otherwise, unless required to do so by law.

All written or oral forward-looking statements that are made by or attributable to us are expressly qualified in their entirety by this cautionary notice.

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PART I

ITEM 1.    BUSINESS

General

Effective January 31, 2016, Tailored Brands, Inc., a Texas corporation ("Tailored Brands" or the "Company"), became the successor reporting company to The Men's Wearhouse, Inc. ("Men's Wearhouse") pursuant to a holding company reorganization (the "Reorganization"). Upon completion of the Reorganization, each issued and outstanding share of common stock of Men's Wearhouse was automatically converted into one share of common stock of Tailored Brands, having the same designations, preferences, limitations, and relative rights and corresponding obligations as the shares of common stock of Men's Wearhouse. Furthermore, Tailored Brands replaced Men's Wearhouse as the publicly held corporation and its common stock trades on the New York Stock Exchange ("NYSE") under the trading symbol "TLRD". We believe that the holding company structure will allow us to support, nurture and augment our family of brands as we further leverage our shared services platform.

Unless the context otherwise requires, references in this report to "Company", "we", "us" and "our" for periods prior to January 31, 2016, refer to Men's Wearhouse which was the parent company and the registrant prior to the Reorganization, and, for periods after the Reorganization, to Tailored Brands which is the new parent holding company, in each case including its consolidated subsidiaries. References herein to years are to the Company's 52-week or 53-week fiscal year, which ends on the Saturday nearest January 31 in the following calendar year. The periods presented in these financial statements are the fiscal years ended January 30, 2016 ("fiscal 2015"), January 31, 2015 ("fiscal 2014"), and February 1, 2014 ("fiscal 2013"). Each of these periods had 52 weeks.

Our Brands and Products

We are the largest specialty retailer of men's suits and the largest provider of tuxedo and suit rental product (collectively, "rental product") in the United States ("U.S.") and Canada. At January 30, 2016, we operated a total of 1,724 retail stores including tuxedo shops within Macy's department stores, with 1,600 stores in the U.S. and Puerto Rico as well as 124 stores in Canada. Our U.S. retail stores are operated under Men's Wearhouse, Men's Wearhouse and Tux, Jos. A. Bank, Joseph Abboud and K&G brand names and are operated in 50 states, the District of Columbia and Puerto Rico. Our Canadian stores are operated under the Moores brand name and operate in ten Canadian provinces. In addition, at January 30, 2016, we operated 35 retail dry cleaning, laundry and heirlooming facilities through MW Cleaners in Texas. These operations comprise our retail segment.

On June 18, 2014, the Company acquired Jos. A. Bank Clothiers, Inc. ("Jos. A. Bank"), a men's specialty apparel retailer with 624 retail stores (excluding 15 franchise stores) across the U.S., for total consideration of approximately $1.8 billion. On August 6, 2013, we acquired JA Holding, Inc. ("JA Holding"), the parent company of the American clothing brand Joseph Abboud and a U.S. tailored clothing factory, for $94.9 million in cash consideration. For additional information, refer to Note 2, "Acquisitions", to our consolidated financial statements included in this Annual Report on Form 10-K.

Additionally, we operate two corporate apparel providers. Our UK-based holding company operates the largest provider of corporate apparel in the United Kingdom ("UK") under the Dimensions, Alexandra and Yaffy brands. In the U.S. we provide corporate apparel under the Twin Hill brand name. These operations provide corporate clothing uniforms and workwear to workforces through multiple channels including managed corporate accounts, catalogs and the internet. We initially acquired 86% of the UK-based holding company in 2010. In 2014, we purchased the remaining 14% non-controlling interest from previous shareholders of Dimensions for total consideration of approximately $6.7 million. These operations comprise our corporate apparel segment.

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For information on store closings and openings, see "Item 6. Selected Financial Data" in this Annual Report on Form 10-K. Financial information concerning business segments and geographic area is contained in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and under Note 17 to our consolidated financial statements both included in this Annual Report on Form 10-K.

Retail Segment

In our retail segment, we offer our products and services primarily through our four retail brands—Men's Wearhouse/Men's Wearhouse and Tux, Jos. A. Bank, Moores and K&G—and the internet at www.menswearhouse.com, www.josbank.com, and www.josephabboud.com. Our stores are located throughout the U.S., Puerto Rico, and Canada. Men's Wearhouse, Moores and K&G each operate as a house of brands carrying a wide selection of exclusive and non-exclusive merchandise brands. Jos. A. Bank is a branded house whose merchandise is sold substantially under the exclusive Jos. A. Bank label. MW Cleaners is also included in the retail segment as these operations have not had a significant effect on our revenues or expenses. Also, as a result of our acquisition of JA Holding, we operate a factory located in New Bedford, Massachusetts that manufactures quality U.S. made tailored clothing under the Joseph Abboud label including designer suits, tuxedos, sport coats and slacks which we sell in our Men's Wearhouse stores as well as our Joseph Abboud flagship store.

The Men's Wearhouse targets the male consumer (25 to 55 years old) by providing a superior level of customer service and offering a broad selection of exclusive and non-exclusive merchandise brands at regular and sale prices we believe are competitive with specialty and traditional department stores. Our merchandise includes suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, shoes and accessories in classic, modern and slim fits and in a wide range of sizes including a selection of "Big and Tall" product.

Although basic styles are emphasized, each season's merchandise reflects current fit, fabric and color trends. The inventory mix at our Men's Wearhouse stores includes business, business casual, casual and formal merchandise designed to meet the demand of our customers. The broad merchandise selection creates increased sales opportunities by permitting a customer to purchase substantially all of his wardrobe and accessory requirements, including shoes, at our retail apparel stores. Also, at Men's Wearhouse stores, we offer our customers the ability to purchase a custom-made Joseph Abboud suit which can be produced in approximately three weeks and is unique to each customer's specifications. Based on our experience, we believe that the depth of selection offered provides us with an advantage over most of our competitors.

We also offer a full selection of rental product. We believe our rental product broadens our customer base by drawing first-time and younger customers into our stores and accordingly, our offering includes an expanded merchandise assortment including dress and casual apparel targeted toward the younger customer.

On June 10, 2015, we entered into a 10-year agreement with Macy's, Inc. to operate men's tuxedo rental shops inside 300 Macy's department stores. As of January 30, 2016, we operated 12 tuxedo shops within Macy's stores under the name "The Tuxedo Shop @ Macy's." We have refined our Tuxedo Shop @ Macy's rollout schedule and now plan to open 166 stores in 2016 with the balance of 122 stores to be opened in 2017. In addition, we will collaborate with Macy's to develop an online tuxedo rental shop. Throughout this Annual Report on Form 10-K, the term "shops within Macy's stores" is used to describe our business operations with Macy's.

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At January 30, 2016, we operated 713 Men's Wearhouse retail apparel stores in 50 states, the District of Columbia and Puerto Rico. These stores are referred to as "Men's Wearhouse stores" or "full line stores" that offer a full selection of retail merchandise and rental product. Men's Wearhouse stores are primarily located in regional strip and specialty retail shopping centers or in freestanding buildings as we believe that men prefer direct and easy store access that enables our customers to park near the entrance of the store.

At January 30, 2016, we also operated another 160 stores in 32 states branded as Men's Wearhouse and Tux. These stores are referred to as "rental stores" and offer a full selection of rental product and a limited selection of retail merchandise and are located primarily in regional malls and lifestyle centers. During fiscal 2015, we closed 50 Men's Wearhouse and Tux stores as we continued to experience a consumer driven shifting of rental revenues to our full line stores located in close proximity to the rental stores. Also, many of our Men's Wearhouse and Tux stores are in the same retail centers in which we plan to operate our shops within Macy's stores. Therefore, as a result of both the shifting of rental revenues to our full line stores and our agreement with Macy's, we expect to close between 100 and 110 Men's Wearhouse and Tux stores in fiscal 2016.

Jos. A. Bank targets the male consumer (25 to 55 years old) emphasizing high quality tailored and business casual clothing and accessories, substantially all of which is sold under our exclusive Jos. A. Bank label. Jos. A. Bank merchandise consists of suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, shoes and accessories in primarily traditional styles and in a wide range of sizes including a selection of "Big and Tall" product. Our merchandising strategy is focused on classic styling with attention to detail in quality materials and workmanship. We also offer rental product at all of our Jos. A. Bank stores. We believe our rental product provides the opportunity to broaden our customer base by drawing first-time and younger customers into our stores.

At January 30, 2016, we operated 625 Jos. A. Bank retail apparel stores (including 49 factory stores) in 43 states and the District of Columbia. Jos. A. Bank stores are primarily located in fashion-oriented, specialty retail centers. In addition, as of January 30, 2016, there are 14 franchise stores. In March 2016, we announced a store rationalization program, which identified approximately 80 to 90 Jos. A. Bank full line and 49 Jos. A. Bank factory stores to be closed in fiscal 2016. See "Business Strategy" for additional information on the performance of our Jos. A. Bank brand in 2015 and strategic initiatives for 2016 and beyond.

Moores targets the male consumer (25 to 55 years old) by providing a superior level of customer service and offering a broad selection of exclusive and non-exclusive merchandise brands at regular and sale prices that we believe are competitive with traditional Canadian specialty and department stores. Moores' merchandise consists of suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, shoes and accessories in classic, modern and slim fits and in a wide range of sizes including a selection of "Big and Tall" product. Similar to our Men's Wearhouse stores, we offer our customers the ability to purchase a custom-made Joseph Abboud suit which can be produced in approximately three weeks and is unique to each customer's specifications.

We also offer rental product at all of our Moores stores which we believe broadens our customer base by drawing first-time and younger customers into our stores. To further accommodate these younger rental customers, we also offer an expanded merchandise assortment including dress and casual apparel targeted toward a younger customer.

At January 30, 2016, we operated 124 retail apparel stores in ten Canadian provinces. Moores stores are primarily located in regional strip and specialty retail shopping centers.

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K&G stores offer a more value-oriented superstore approach that we believe appeals to the more price-sensitive customer in the apparel market. K&G offers first-quality, current-season apparel and accessories comparable in quality to that of traditional department stores, at prices we believe are typically up to 60% below the regular prices charged by such stores. K&G's merchandising strategy emphasizes broad assortments across all major categories of both men's and women's career apparel in a wide range of sizes including "Big and Tall" and "Women's plus sizes" as well as tailored clothing, dress furnishings, sportswear, accessories and shoes and children's apparel. This merchandise selection, which includes exclusive and non-exclusive merchandise brands, positions K&G to attract a wide range of customers in each of its markets.

At January 30, 2016, we operated 89 K&G stores in 27 states, 82 of which offer women's career apparel, sportswear, accessories and shoes and children's apparel. K&G stores are "destination" stores located primarily in second generation strip shopping centers that are easily accessible from major highways and thoroughfares.

Our near-term business strategy includes:

The underlying rationale of our acquisition of Jos. A. Bank on June 18, 2014 was our desire to increase our market share and capture operational efficiencies. The overlap between the Jos. A. Bank customer base and the Men's Wearhouse customer base is minimal and as a result, we believed and still believe that Jos. A. Bank would be complementary and incremental to our existing portfolio of brands.

Upon closing the acquisition, we focused on (a) integrating the people, processes and systems, including point-of-sale, merchandising, and back office, (b) realizing significant cost synergies, (c) introducing new, updated and expanded assortments in the Jos. A. Bank stores, (d) making changes to the Jos. A. Bank promotional and brand building strategies, and (e) identifying and implementing new revenue growth initiatives, including the expansion of rental product into all Jos. A. Bank stores.

While we have had success in many of these initiatives, we have been challenged in retaining and growing revenue at Jos. A. Bank. After we completed the integration, we were able to develop a better understanding of the Jos. A. Bank business and promotional model. As our understanding of the Jos. A. Bank business grew, we concluded that the historical promotional pricing model at Jos. A. Bank had been delivering diminishing returns over time, and we realized that attaining satisfactory profitable revenue synergies was going to require eliminating the most excessive promotional offers.

During the latter half of 2015, the effectiveness of the existing Jos. A. Bank promotional model began to deteriorate quicker than we anticipated. As a result, we made the decision to accelerate the transition away from the harmful promotional cadence by removing the most excessive offers (the Buy-One-Get-Three or more Free events), and began seeking sustainable volume and margin growth.

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While we expected some top-line volatility as we changed the promotional model, we did not anticipate that the impact on top-line sales from the traffic decline would occur to the degree it did. As a result of the steep decline in Jos. A. Bank's sales and the significant decline in our market capitalization, we recorded $1.24 billion of goodwill and intangible asset impairment charges related to Jos. A. Bank in fiscal 2015. We remain confident that Jos. A. Bank offers a longer-term opportunity to profitably grow market share in the menswear business and the Jos. A. Bank brand is a key part of our overall business strategy.

Despite these results, we continue to believe that transitioning away from the unsustainable promotional strategy we inherited from Jos. A. Bank and the introduction of our new promotional strategy will provide a foundation for long-term profitability at the Jos. A. Bank brand. We have introduced new promotional offers that do not require excessive quantity purchases and are better aligned with how our customers have told us they prefer to shop. Our customer research indicates that while our existing customers appreciate our quality and value, many dislike being forced to buy in quantity and many of our prospective Jos. A. Bank customers found our promotional offers confusing and caused them to question the quality of our products. We launched new branding messaging that speaks to a quality promise and introduced a new 1905 collection targeting a younger customer. In addition, we introduced a loyalty program that rewards our customers and encourages more frequent purchases. Along with the changes to our marketing strategies, we introduced new selling techniques and a new store compensation program that aligned incentives with the improved selling behaviors.

As we focus on reengineering the Jos. A. Bank brand to a long-term sustainable profit model, we announced additional changes in 2016 as described below:

Our future growth plans also include the integration of digital technologies to provide a sales experience that combines the advantages of our physical store with an information rich online shopping experience through our website and mobile applications. For example, at Men's Wearhouse and Jos. A. Bank stores, if a customer wants to purchase an item that is not available at the store our clothing consultants can order it through our websites to fulfill the customer's purchasing needs. In addition, during 2015, we launched our ship from store initiative which further enhanced our customer's online shopping experience. Also, through our websites we are able to offer international shipping to over 100 countries. We plan to continue to make investments in technologies, business processes and personnel intended to deepen our customer relationships and increase our share of their closet.

In March 2016, we announced an extensive profit improvement program that we believe will reduce our expenses by approximately $50 million in fiscal 2016. This program includes reduced distribution costs, cost reductions in our organizational structure, payroll and employee benefit reductions and savings in occupancy and goods-not-for-resale. We estimate the cash costs to complete the profit improvement program and store rationalization program, described below, to be between $45 and $60 million for 2016.

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In March 2016, we announced a store rationalization program in which we plan to close around approximately 250 stores during fiscal 2016. The store closures fall into three categories. First, we expect to close around 80 to 90 full line Jos. A. Bank stores, which we believe have limited potential for meaningful profit improvement. Second, we will close all Jos. A. Bank (49) and Men's Wearhouse (9) outlet stores. We have determined that outlet stores, which collectively were not profitable, are not sufficiently differentiated enough from our core offerings and have not resonated with our customers. Lastly, we plan to close between 100 and 110 MW Tux stores. These closings are a continuation of our strategy of migrating rental revenue to full line stores and reflective of our rollout of shops within Macy's stores. We believe that this store rationalization program is important to our long-term profitability as it will eliminate underperforming stores and re-balance the store fleet and cost structure.

We believe that expanding the number of exclusive brands that we carry will increase our margins and profitability. We continue to evaluate the acquisition of brands and trademarks, as well as the development of brands in-house. During fiscal 2013, we acquired JA Holding, the parent company of the American clothing brand Joseph Abboud and a U.S. tailored clothing factory. We believe this transaction accelerated our strategy of offering exclusive brands with broad appeal at attractive prices. In addition, we have a consulting agreement with Joseph Abboud pursuant to which he was named our Chief Creative Director and engaged to create exclusive brands and products for our customers. We launched a Joseph Abboud website in late 2014 and opened a Joseph Abboud flagship store in New York City in 2015. In 2015, we launched an exclusive designer men's clothing line through a partnership with Kenneth Cole, under the "Awearness Kenneth Cole" label. The collection includes ties, dress shirts, suits, sport coats and dress pants in slim fits.

We plan to broaden the reach of our rental product business primarily through the opening of the shops within Macy's stores, growing the rental product business at Jos. A. Bank stores and through the use of our website for rentals. We believe that our tuxedo marketing initiatives, including our shops within Macy's stores and our David's Bridal and TheKnot.com relationships, rental offerings, online website enhancements and continued emphasis on customer service are key aspects of our rental product business strategy.

Men's Wearhouse, Jos. A. Bank and Moores sales personnel are trained as consultants to provide customers with assistance and advice on their apparel needs, including product style, color coordination, fabric choice and garment fit. Wardrobe consultants are encouraged to offer guidance to the customer at each stage of the decision-making process, making every effort to earn the customer's confidence and to create a professional relationship that will continue beyond the initial visit.

K&G stores are designed to allow customers to select and purchase apparel by themselves. For example, each merchandise category is clearly marked and organized by size, and suits are specifically tagged as a means of further assisting customers to easily select their styles and sizes. K&G employees are also available to assist customers with merchandise selection, including correct sizing.

Substantially all of our retail apparel stores offer tailoring services to facilitate timely alterations at a reasonable cost to customers. Tailored clothing purchased at a Men's Wearhouse store will be pressed and re-altered (if the alterations were performed at a Men's Wearhouse store) free of charge for the life of the garment. In addition, Jos. A. Bank utilizes Company-owned regional tailor shops, which receive

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merchandise from stores to perform tailoring services and return the merchandise to the selling store for customer pickup.

We offer our "Perfect Fit" loyalty program to our Men's Wearhouse, Men's Wearhouse and Tux and Moores customers. In October 2015, we launched the "Bank Account" loyalty program for Jos. A. Bank customers, which offers the same benefits and operates in the same manner as the "Perfect Fit" loyalty program. Under the loyalty programs, customers receive points for purchases. Points are equivalent to dollars spent on a one-for-one basis, excluding any sales tax dollars. Upon reaching 500 points, customers are issued a $50 rewards certificate which they may use to make purchases at our stores or online. All customers who register for our loyalty programs are eligible to participate and earn points for purchases. A majority of the sales transactions at our Men's Wearhouse, Men's Wearhouse and Tux and Moores stores were to customers who participated in the loyalty program for fiscal 2015. We believe that the loyalty programs facilitate our ability to cultivate long-term relationships with our customers.

Our advertising strategy primarily consists of television, email, online (including social networking), mobile, direct mail, telemarketing and bridal shows. We consider our integrated efforts across these channels to be the most effective means of both attracting and reaching potential new customers, as well as reinforcing the positive attributes of our various brands with our existing customer base. In addition, for Jos. A. Bank, we occasionally distribute a catalog to communicate the Jos. A. Bank image, to provide customers with fashion guidance in coordinating outfits and to generate traffic in all of Jos. A. Bank's sales channels.

For the Men's Wearhouse, Jos. A. Bank and Moores brands, our vertical direct sourcing model with third-party vendors covers design, product development, manufacturing, testing, quality control, and all necessary logistics required to get merchandise from the factory to the sales floor. We purchase merchandise and rental product from a broad vendor base and do not believe that the loss of any vendor would cause a significant negative impact to us. We have no long-term merchandise supply contracts and typically transact business on a purchase order-by-purchase order basis either directly with manufacturers and fabric mills or with trading companies. We have developed long-term and reliable relationships with most of our direct manufacturers and fabric mills, which we believe provides stability, quality and price leverage. We also work with trading companies that support our relationships with vendors for our direct sourced merchandise and contract agent offices that provide administrative functions on our behalf. In addition, the agent offices provide all quality control inspections and ensure that our operating procedures manuals are adhered to by our suppliers.

Jos. A. Bank uses buying agents to source a significant portion of Jos. A. Bank products from various companies located in or near Asia. In fiscal 2015, two buying agents sourced, respectively, approximately 45% and 6% of Jos. A. Bank total product purchases.

In fiscal 2015, our retail brands sourced approximately 60% of direct sourced merchandise from Asia (36% from China) while 13% was sourced in the U.S., 12% in Mexico, and 15% was sourced in other regions. Substantially all of our foreign purchases are negotiated and paid for in U.S. dollars. All direct sourcing vendors are expected to adhere to our Supplier Code of Conduct. To oversee compliance, we have a direct sourcing compliance department and we also use the services of an outside audit company to conduct regular vendor audits.

In addition, we operate a factory located in New Bedford, Massachusetts that manufactures quality U.S. made tailored clothing under the Joseph Abboud label, including designer suits, tuxedos, sport coats and slacks which we sell in our Men's Wearhouse stores as well as our Joseph Abboud flagship store. We also sell Joseph Abboud branded product in our Moores stores, which is produced by a third party in Canada.

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All retail apparel merchandise for Men's Wearhouse/Men's Wearhouse and Tux stores is received into our distribution centers located in Houston, Texas, where it is either placed in back-stock or allocated to a store for shipping. In the majority of our larger markets, we also have separate hub distribution facilities or space within certain Men's Wearhouse stores used as redistribution facilities for their respective areas. Merchandise for Jos. A. Bank is received and distributed to stores from our distribution centers in Hampstead and Eldersburg, Maryland, while most purchased merchandise for Moores is distributed to the stores from our distribution center in Montreal, Quebec. The majority of merchandise for our K&G stores is direct shipped by vendors to the stores with the remainder of K&G merchandise being transported to our K&G stores via a third-party logistics firm. In 2016, we expect to transition to a regional distribution center approach for the Men's Wearhouse/Men's Wearhouse and Tux and Jos. A. Bank brands to optimize our shipping and freight costs that leverages the geographic locations of our main distribution centers in Texas and Maryland as well as the hub facilities described above.

Our rental product is located in our Houston distribution center and in six additional distribution facilities located in the U.S. (five) and Canada (one). The six additional distribution facilities also receive limited quantities of retail product, primarily formalwear accessories, that is sold in our Men's Wearhouse/Men's Wearhouse and Tux, Moores and Jos. A. Bank stores.

All retail merchandise and new rental product transported from vendors to our distribution facilities is done so via common carrier or on a dedicated fleet of long-haul vehicles. This dedicated fleet is also used to transport product from our distribution centers to the hub facilities and a fleet of leased or owned smaller vehicles is used to transport product from the hub facilities to our stores within a given geographic region.

We compete against a broad spectrum of other men's clothing stores. Our primary competitors include traditional department stores, other specialty men's clothing stores, online retailers, online tuxedo rental providers, off-price retailers, manufacturer-owned and independently-owned outlet stores and their e-commerce channels, and independently owned tuxedo rental stores. We believe that the principal competitive factors in the menswear market are merchandise assortment, quality, value, garment fit, merchandise presentation, store location and customer service, including on-site tailoring.

We believe that our merchandise offerings, including exclusive brands, and emphasis on customer service distinguish us from other retailers. Certain of our competitors (principally department stores) may be larger and may have substantially greater financial, marketing and other resources than we have and therefore may have certain competitive advantages.

Corporate Apparel Segment

Our corporate apparel segment, conducted by Twin Hill in the U.S. and by our UK holding company operating under the Dimensions, Alexandra and Yaffy brands primarily in the UK and Europe, provides corporate clothing uniforms and workwear to workforces. We offer our corporate apparel clothing products through multiple channels including managed corporate accounts, catalogs and the internet at www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk. We offer a wide variety of customer branded apparel such as shirts, blouses, trousers, skirts and suits as well as a wide range of other products from aprons to safety vests to high visibility police outerwear. With respect to our managed contracts, we generally provide complete management of our customers' corporate clothing programs from design, fabric buying, manufacturing, product roll-outs and ongoing stock replacement and replenishment.

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Our customer base includes companies and organizations in the airline, retail grocery, retail, banking, distribution, travel and leisure, postal, security, healthcare and public sectors. Sector characteristics and economics tend to impact the corporate wear requirements of our individual customers. For example, retail customers typically have high staff turnover levels resulting in large replenishment volumes and significant seasonal demand, while banking customers generally have lower turnover and replenishment requirements but refresh or rebrand uniforms more frequently. The public service sector has historically consisted of fragmented regional authorities although there seems to be a move in the UK toward more consolidated sourcing units.

Our managed contract customers are generally organizations with larger numbers of uniform wearing employees or those that use uniforms as a form of brand identity. We have long established relationships with many of the UK's top employers and we currently maintain approximately 30 managed accounts with an average account size greater than 15,000 wearers. In addition, in fiscal 2015, we were awarded the uniform business for American Airlines, the largest managed contract we have obtained. The rollout of the American Airlines uniform program will occur in fiscal 2016. Our typical catalog customers are small to medium sized organizations with a relatively smaller number of employees or organizations where brand differentiation is not imperative.

Under our managed contracts, we take responsibility for dressing our customers' employees and are the exclusive supplier of corporate wear to many of our customers. Because of the nature of the managed contract model, we ensure that we are fully involved in all of our customers' uniform requirements, from daily replenishment requirements to longer term rebranding plans and wider corporate wear strategy. As a result, our relationship and level of interaction with our customers is generally far deeper and more embedded than conventional customer-supplier relationships.

Managed contracts are generally awarded through a request for proposal or tender process for multi-year contracts. Our teams continually monitor market opportunities to obtain access to such contracts. Regular contact with corporate wear buyers is supplemented with mail campaigns, attendance at trade fairs and trade magazine advertisements. Generally, we provide each managed contract customer with a specific account manager who often works two or three days a week on-site at our larger customers' offices. In addition to maintaining customer requirements, the account manager is also responsible for suggesting and implementing ways of improving the customer's corporate wear process.

During fiscal 2015, no one customer accounted for 10% or more of our total corporate apparel net sales and we do not believe that the loss of any customer would significantly impact us.

Our catalogs are distributed electronically, via mail and by sales representatives to current and potential customers. The catalogs offer a full range of our products and offer further branding or embellishment of most products ordered. Catalog orders can be placed via phone, mail, fax or direct contact with our sales representatives and, in the U.S., via client-specific websites. Our UK e-commerce platforms also allow online ordering via our websites and provide 24-hour functionality, with a full list of our products and their details. In addition, we regularly develop dedicated websites for our corporate clients for use by their employees in ordering their company specific corporate wear.

In our corporate apparel operations, we work with our customers to create custom apparel programs designed to support and enhance their respective brands. Our comprehensive apparel collections, including basic apparel categories such as shirts, blouses, trousers, skirts and suits as well as a wide range of other products from aprons to safety vests to high visibility police outerwear, feature designs with sizes and fits that meet the performance needs of our customers' employees and utilize the latest technology in long-

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wearing fabrications. Career wear, casual wear and workwear make up an increasingly significant portion of the product mix as service industry customers continue to grow.

Under our managed contracts, our customers receive a full range of services including design, fabric buying and manufacturing, measuring and sizing, employee database management and replenishment forecasting, supply chain management and distribution and logistics of finished products. Customers work with our in-house design and technical teams to design and develop uniforms or other corporate wear that creates strong brand identity. We utilize our management information and garment tracking system which highlights trends, identifies issues and provides benchmark data for the customer at all levels from individual wearer to enterprise-wide. This system also allows us to identify potential cost savings and develop solutions on behalf of our customers and to respond quickly to trends or other changing needs.

With respect to our UK catalog and internet operations, customers can design an off-the-rack program that provides custom alterations and embroidery on any of our standard, ready-to-wear clothing. We work with such customers to create a distinctive, branded program that may include the addition of a company logo or other custom trim.

Most corporate apparel garment production is outsourced to third-party manufacturers and fabric mills through our direct sourcing programs. We have developed long-term relationships with most of our direct manufacturers and fabric mills, which we believe provides stability, quality and reliability. We do not have any material long-term contracts with our vendors and we do not believe that the loss of any vendor would significantly impact us. We also work with trading companies that support our relationships with our direct source vendors and with contract agent offices that provide administrative functions on our behalf. In addition, the agent offices assist with quality control inspections and ensure that our operating procedures manuals are adhered to by our suppliers.

During 2015, approximately 60% of our corporate wear product purchases was sourced in Asia (primarily China, Bangladesh, Indonesia, Pakistan, and Sri Lanka) while approximately 40% was sourced from Europe and other regions. Our foreign purchases from Asia are negotiated and paid for in U.S. dollars, while our purchases from Europe and other regions are negotiated and paid for in pounds Sterling or Euros.

To oversee compliance with our Supplier Code of Conduct, we use internal resources as well as third party companies to audit the factories producing our garments. We strive to work collaboratively with our suppliers to positively influence them to embed compliance into their daily operations.

Corporate apparel merchandise is received into our distribution facilities located in Long Eaton and Glasgow for the UK operations and Houston, Texas and Bakersfield, California for U.S. operations. Customer orders are dispatched to the customer or individual wearers employed by the customer via common carrier or pursuant to other arrangements specified by the customer.

Our UK corporate apparel group provides workwear and uniforms to more UK employees than any of our corporate apparel competitors, which consist mostly of companies that focus more on catalog business. The U.S. corporate wear market is more fragmented with several U.S. competitors being larger and having more resources than Twin Hill. We believe that the competitive factors in the corporate wear market are merchandise assortment, quality, price, customer service and delivery capabilities. We believe that our proven capability in the provision of corporate apparel programs to businesses and organizations of all sizes alongside our catalog and internet operations position us well with our existing customers and should enable us to continue to gain new catalog accounts and managed contracts.

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Seasonality

Our sales and net earnings are subject to seasonal fluctuations. Our rental revenues are heavily concentrated in the second and third quarters (prom and wedding season) while the fourth quarter is considered the seasonal low point. In addition, Jos. A. Bank has historically experienced increased customer traffic during the holiday season and its increased marketing efforts during the holiday season have historically resulted in sales and net earnings generated in the fourth quarter, which are significantly larger as compared to the other three quarters. This trend did not occur in the fourth quarter of 2015 as a result of our decision to change the brand's promotional cadence. We currently expect this trend to resume in the future. With respect to corporate apparel sales and operating results, seasonal fluctuations are not significant but the acquisition of new customers or existing customer decisions to rebrand or revise their corporate wear programs can cause significant variations in period results. Because of these fluctuations, results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

Trademarks and Service Marks

We are the owner in the U.S. and selected other countries of the trademarks and service marks MEN'S WEARHOUSE, MW MEN'S WEARHOUSE (and design), JOS. A. BANK, and JOSEPH ABBOUD and of U.S. federal and foreign registrations thereof. Our rights in the MEN'S WEARHOUSE and JOS. A. BANK marks and their respective variations are a significant part of our business, as the marks have become well known through our use of the marks in connection with our retail and formalwear rental services and products (both in store and online) and our advertising campaigns. We are also the owner of various marks and trademark registrations in the U.S., Canada and abroad under which our stores and corporate apparel business operate or which are used to label the products we sell or rent. We intend to maintain and protect our marks and the related registrations.

We also license the JOSEPH ABBOUD brand to certain third parties for limited products in the U.S. and Canada, and for a broader range of products abroad.

We are the licensee for certain designer labels on products of a specific nature (such as men's suits, men's formalwear or men's shirts). We generally pay a royalty for the use of the label, based on cost for the relevant product or a percentage of related sales. The labels licensed under these agreements will continue to be used in connection with a portion of the purchases under the direct sourcing program described above, as well as purchases from other vendors. We monitor the performance of these licensed labels compared to their cost and may elect to selectively terminate any license, as provided in the particular agreement.

Employees

At January 30, 2016, we had approximately 24,500 employees, consisting of approximately 21,900 in the U.S. and 2,600 in foreign countries, of which approximately 18,000 were full-time employees. Seasonality affects the number of part-time employees as well as the number of hours worked by full-time and part-time personnel.

At January 30, 2016, approximately 700 of our employees at the factory located in New Bedford, Massachusetts that manufactures our Joseph Abboud clothing are members of Unite Here, a New England based labor union. The current union contract expires in April 2016 and we are currently engaged in negotiations to enter into a new union contract. Also, approximately 290 employees working in the Jos. A. Bank Hampstead, Maryland tailoring overflow shop and distribution centers are represented by the Mid-Atlantic Regional Joint Board, Local 806. Our contract with the Mid-Atlantic Regional Joint Board, Local 806 expires in February 2017. Lastly, approximately 120 Jos. A. Bank sales associates in New York City and four surrounding New York counties are represented by Local 340, New York New Jersey Regional Joint Board, Workers United. Our most recent collective bargaining agreement covering these

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employees is scheduled to expire in April 2016 and we are currently engaged in negotiations to enter into a new collective bargaining agreement.

We believe our relationship with our union and nonunion employees is good and we have no reason to believe that we will experience any interruption in our business upon the expiration of these collective bargaining agreements.

Available Information

Our website address is www.tailoredbrands.com. No information contained on any of our websites is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. Through the investor relations section of our website, we provide free access to our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (the "SEC"). In addition, copies of the Company's annual reports will be made available, free of charge, upon written request. The SEC maintains a website that contains the Company's filings and other information regarding issuers who file electronically with the SEC at www.sec.gov.

Effective January 31, 2016, Tailored Brands became the successor reporting company to Men's Wearhouse, pursuant to the Reorganization. Men's Wearhouse began operations in 1973 as a partnership and was incorporated as Men's Wearhouse under the laws of Texas in May 1974. Our principal corporate and executive offices are located at 6380 Rogerdale Road, Houston, Texas 77072-1624 (telephone number 281-776-7000) and at 6100 Stevenson Blvd., Fremont, California 94538-2490 (telephone number 510-657-9821), respectively.

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ITEM 1A.    RISK FACTORS

We wish to caution you that there are many risks and uncertainties that could adversely affect our business. These risks and uncertainties include, but are not limited to, the risks described below and elsewhere in this report, particularly found in "Forward-Looking and Cautionary Statements." The following is not intended to be a complete discussion of all potential risks or uncertainties, as it is not possible to predict or identify all risk factors. Unknown or unidentified additional risks and uncertainties could also adversely affect our business. In addition, the risks described below are not listed in order of the likelihood that the risk might occur or the severity of the impact if the risk should occur.

Risks Associated with our Business Strategy

As noted on page 6, our overall business strategy is focused on several initiatives. If we cannot successfully execute our business strategy, our consolidated financial condition, results of operations and cash flows could be materially adversely impacted. There are numerous risks associated with this strategy including, but not limited to, the following:

Our strategy related to the Jos. A. Bank brand may negatively impact our short-term and long-term profitability.

Reengineering the Jos. A. Bank brand to a long-term, sustainable profit model is a key part of our business strategy. There can be no assurance that strategic initiatives being implemented at Jos. A. Bank will favorably impact the Jos. A. Bank's operations or will be successfully executed or executed in the time period projected. Any failure to successfully and timely implement these initiatives can be expected to negatively impact Jos. A. Bank's sales and profitability.

We may not realize the anticipated benefits of the acquisition of Jos A. Bank, which could adversely impact our sales and profitability.

We have devoted and will continue to devote significant managerial attention and resources into the operations of Jos. A. Bank. While we believe that we have sufficient resources to realize the benefits of the acquisition, there are a number of significant risks involved. There can be no assurance that:

If we are unable to achieve a substantial portion of the anticipated benefits of the acquisition, it could have a material adverse effect on our sales and profitability.

We may not realize the benefits of our profit improvement and store rationalization programs.

In March 2016, we announced profit improvement and store rationalization programs. The estimated costs and benefits associated with these programs are preliminary and may vary materially based on various factors including: the timing in execution of the programs, outcome of negotiations with landlords and other third parties, inventory levels, and changes in management's assumptions and projections. As a result of these events and circumstances, delays and unexpected costs may occur, which could result in our not realizing all, or any, of the anticipated benefits of these programs.

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Our success depends, in part, on our ability to meet the changing preferences of our customers and manage merchandise lead times.

We believe that men's attire is characterized by infrequent and more predictable fashion changes. Our success, however, is dependent in part upon our ability to gauge the tastes of our customers and to provide merchandise that satisfies customer demand in a timely manner. As our business is seasonal, we must purchase and carry a significant amount of inventory prior to peak selling seasons.

We issue purchase orders for the purchase and manufacture of merchandise well in advance of the applicable selling season. As a result, we are vulnerable to demand and pricing shifts. In addition, lead times for many of our purchases are lengthy, which may make it more difficult for us to respond quickly to new or changing merchandise trends or consumer acceptance of our products. As a result, there could be a material adverse effect on our business, financial condition and results of operations.

We believe our overall product mix makes our business less vulnerable to changes in merchandise trends than many fashion-forward and specialty apparel retailers; however, our sales and profitability depend upon our continued ability to effectively manage a variety of competitive challenges, including:

Increased competition or our failure to meet these competitive challenges could result in price reductions, increased marketing expenditures and loss of market share, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our investments in omni-channel initiatives may not deliver the results we anticipate.

One of our strategic priorities is to further develop an omni-channel shopping experience for our customers through the integration of our store and digital shopping channels. We continue to explore additional ways to develop an omni-channel shopping experience, including further digital integration and customer personalization. These initiatives involve significant investments in information technology systems. If the implementation of our omni-channel initiatives is not successful, or we do not realize the return on our omni-channel investments that we anticipate, our operating results would be adversely affected.

Our ability to continue to expand our stores may be limited.

A large part of our growth has resulted from the addition of new Men's Wearhouse stores and the increased sales volume and profitability provided by these stores. In addition, the acquisition of Jos. A. Bank significantly increased the total number of retail stores we operate. As of January 30, 2016, we operate 713 Men's Wearhouse stores, 625 Jos. A. Bank stores, 124 Moores stores, and 89 K&G stores. We will continue to depend on adding new stores to increase our sales volume and profitability; however, we believe that our ability to increase the number of new stores in the U.S. and Canada may be limited. Therefore, we may not be able to achieve the same rate of growth as we have historically.

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In addition, our ability to open new stores will depend on our ability to obtain suitable locations, negotiate acceptable lease terms, hire qualified personnel and open and operate new stores on a timely and profitable basis. Continued expansion will place increasing demands on our operational, managerial and administrative resources. These increased demands could cause us to operate our business less effectively and in turn, could adversely affect our financial performance and results of operations. Further, the results achieved by our existing stores may not be indicative of the performance or market acceptance of stores in other locations and the opening of new stores in existing markets may adversely affect sales and profits of established stores in those same markets.

Our strategy related to shops within Macy's stores may negatively impact our short-term and long-term profitability.

On June 10, 2015, we entered into a 10-year agreement with Macy's, Inc. to operate men's tuxedo rental shops inside 300 Macy's department stores. As of January 30, 2016, we operated 12 tuxedo shops within Macy's stores under the name "The Tuxedo Shop @ Macy's." Our shops within Macy's stores use selling space within Macy's and are dependent on the Macy's point-of-sale platform. There can be no assurance that our shops within Macy's stores will be successful. In addition, the Macy's management team, including their strategic and marketing decisions, may have an effect on the success of our shops within Macy's stores. We have limited influence over these factors, and a strategic shift by the Macy's management team or a significant disruption in Macy's operations could adversely affect the results of our shops within Macy's stores.

Certain of our expansion strategies may present greater risks.

We are continuously assessing opportunities to expand store concepts and complementary products and services related to our core business, such as corporate apparel and uniform sales. We may expend both capital and personnel resources on such business opportunities which may or may not be successful. Additionally, any new concept is subject to certain risks, including customer acceptance, competition, product differentiation and the ability to obtain suitable sites. There can be no assurance that we will be able to develop and grow new concepts to a point where they will become profitable or generate positive cash flow.

Any future acquisitions that we may undertake could be difficult to integrate, disrupt our business, dilute shareholder value and harm our operating results.

In the event we complete one or more new acquisitions, we may be subject to a variety of risks, including risks associated with an ability to integrate acquired assets, systems or operations into our existing operations, diversion of management's attention from core operational matters, higher costs, or unexpected difficulties or problems with acquired assets or entities, outdated or incompatible technologies, labor difficulties or an inability to realize anticipated synergies and efficiencies, whether within anticipated time frames or at all. If one or more of these risks are realized, it could have an adverse impact on our financial condition and operating results.

Risks Associated with General Economic Conditions

Numerous economic conditions, all of which are outside of our control, could negatively affect the level of consumer spending on the merchandise that we offer. If these economic conditions persist for a sustained period, our consolidated financial condition and results of operations could be materially adversely impacted. These economic conditions include, but are not limited to, the following:

Our business is particularly sensitive to economic conditions and consumer confidence.

Changes in U.S., Canadian, UK and global economic and political conditions could negatively impact consumer confidence and the level of consumer discretionary spending. The continuation and/or

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recurrence of these market, political and economic conditions could intensify the adverse effect of such conditions on our revenues and operating results. Consumer confidence may also be adversely affected by national and international security concerns such as war, terrorism, public health events or natural disasters (or the threat of any of these).

Our business may be adversely affected by a worsening of economic conditions, increases in consumer debt levels and applicable interest rates, uncertainties regarding future economic prospects or a decline in consumer confidence or credit availability. During an actual or perceived economic downturn, fewer customers may shop with us and those who do shop may limit the amounts of their purchases. As a result, we could be required to take significant markdowns and/or increase our marketing and promotional expenses in response to the lower than anticipated levels of demand for our products. In addition, promotional and/or prolonged periods of deep discount pricing by our competitors could have a material adverse effect on our business. Also, as a result of adverse market, political or economic conditions, customers may delay or postpone indefinitely roll-outs of new corporate wear programs, which could have a material adverse effect on our corporate apparel segment.

We have experienced fluctuations in our sales and expect our sales to fluctuate in the future.

We believe that a variety of factors affect comparable sales results including, but not limited to, consumer confidence and the level of consumer discretionary spending, changes in economic conditions and consumer disposable income, spending patterns and debt levels, consumer credit availability, weather conditions, the timing of certain holiday seasons, the number and timing of new store openings, changes in the popularity of a retail center, the timing and level of promotional pricing or markdowns, store closings, relocations and remodels, changes in fashion trends and our merchandise mix or other competitive factors. Comparable sales fluctuations may impact our ability to leverage our fixed direct expenses, including store rent and store asset depreciation, which may adversely affect our financial condition or results of operations.

Our business is seasonal.

Our sales and net earnings are subject to seasonal fluctuations. Our rental revenues are heavily concentrated in the second and third quarters (prom and wedding season) while the fourth quarter is considered the seasonal low point. In addition, Jos. A. Bank has historically experienced increased customer traffic during the holiday season and its increased marketing efforts during the holiday season have historically resulted in sales and net earnings generated in the fourth quarter, which are significantly larger as compared to the other three quarters. This trend did not occur in the fourth quarter of 2015 as a result of our decision to change the brand's promotional cadence. We currently expect this trend to resume in the future. With respect to our corporate apparel sales and operating results, seasonal fluctuations are not significant but the acquisition of new customers or existing customer decisions to rebrand or revise their corporate wear programs can cause significant variations in period results. Because of these fluctuations in our sales, results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

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Risks Associated With Our Sourcing and Distribution Strategies

Our sourcing and distribution strategies are subject to numerous risks that could materially adversely impact our consolidated financial condition and results of operations. These risks include, but are not limited to, the following:

The loss of, or disruption in, our distribution centers could result in delays in the delivery of merchandise to our stores.

All retail apparel merchandise for Men's Wearhouse stores is received into our Houston distribution centers, where the inventory is then processed, sorted and either placed in back-stock or shipped to our stores. In the majority of our larger markets, we also have separate hub facilities or space within certain Men's Wearhouse stores used as redistribution facilities for their respective geographical areas. Our rental product is also stored in our Houston distribution center and, to a lesser extent, in five additional distribution facilities located in the U.S. and one in Canada. Merchandise for Jos. A. Bank is received and distributed from our distribution centers in Hampstead and Eldersburg, Maryland, while most merchandise for Moores is distributed from our distribution center in Montreal, Quebec. The majority of merchandise for our K&G stores is direct shipped by vendors to the stores while the remainder is transported to our K&G stores via a third-party logistics firm. All corporate apparel merchandise is received into our distribution facilities located in Houston or California for our U.S. operations and Long Eaton or Glasgow for our UK operations.

We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules, proper functioning of our information technology and inventory control systems and overall effective management of the distribution centers. Events, such as disruptions in operations due to fire or other catastrophic events, software malfunctions, employee matters or shipping problems, may result in delays in the delivery of merchandise to our stores. For example, given our proximity to the Texas gulf coast, it is possible that a hurricane or tropical storm could damage the Houston distribution centers, result in extended power outages or flood roadways into and around the distribution centers, any of which would disrupt or delay deliveries to the Houston distribution centers and to our stores.

Although we maintain business interruption and property insurance, there can be no assurance that our insurance will be sufficient, or that insurance proceeds will be paid timely to us, in the event any of our distribution centers are damaged or shut down for any reason, or if we incur higher costs and longer lead times in connection with a disruption at one or more of our distribution centers.

Our business is global in scope and can be impacted by factors beyond our control.

As a result of our international operations and our sourcing of merchandise and rental product from vendors located outside of the U. S., we face the possibility of greater losses from a number of risks inherent in doing business in international markets and from a number of factors which are beyond our control. Such factors that could harm our results of operations and financial condition include, among other things:

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We are subject to import risks, including potential disruptions in supply, changes in duties, tariffs, quotas and export restrictions on imported merchandise, and economic, political or other problems in countries from or through which merchandise is sourced or imported.

Many of the products sold in our stores and our corporate apparel operations are sourced from various foreign countries. Political or financial instability, war, civil strife, terrorism, trade restrictions, tariffs, currency exchange rates, transport capacity limitations, labor disruptions, and other factors relating to international trade are beyond our control and could affect the availability and the price of our inventory.

We require our vendors to operate in compliance with applicable laws and regulations and our internal policy requirements. Our business could be adversely affected if our vendors do not comply with applicable legal requirements, our vendor policies and practices generally acceptable in the U. S. regarding social and ethical matters and acceptable labor and sourcing practices (collectively, "Vendor Requirements").

The violation of our Vendor Requirements by any of our vendors could disrupt our supply chain. In addition, any such violation could damage our reputation, which may result in decreased customer traffic to our stores, websites and call center. In the event of any violations, we may decide that it is necessary or desirable to seek alternative vendors, which could adversely affect our business, financial condition and results of operations.

Our business could be adversely affected by increased costs of the raw materials and other resources that are important to our business.

The raw materials used to manufacture our products are subject to availability constraints and price volatility caused by high demand for fabrics, weather conditions, supply conditions, government regulations, economic climate and other unpredictable factors. In addition, our transportation and labor costs are subject to price volatility caused by the price of oil, supply of labor, governmental regulations, economic climate and other unpredictable factors. Increases in demand for, or the price of, raw materials, distribution services and labor, including federal and state minimum wage rates, could have a material adverse effect on our business, financial condition and results of operations.

The increase in the costs of wool and other raw materials significant to the manufacturer of apparel and the costs of manufacturing could materially affect our results of operations to the extent they cannot be mitigated through price increases and relocation to lower cost sources of supply or other cost reductions.

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These increased costs could particularly impact our managed contract corporate wear business which tends to have more long term contractually committed customer sales arrangements with limited price flexibility.

Any significant interruption in raw materials could cause interruptions at our U.S. tailored clothing factory.

The principal raw material used by our U.S. tailored clothing factory is fabric. Most of the factory's supply arrangements are seasonal. The factory does not have any long-term agreements in place with its fabric suppliers; therefore, there can be no assurance that any of such suppliers will continue to do business with us in the future. If a particular mill were to experience a delay due to fire or natural disaster and become unable to meet the factory's supply needs, it could take a period of up to several months for us to arrange for and receive an alternate supply of such fabric. In addition, import and export delays caused, for example, by an extended strike at the port of entry, could prevent the factory from receiving fabric or other raw materials shipped by its suppliers. Therefore, there could be a negative effect on the ability of the factory to meet its production goals if there is an unexpected loss of a supplier of fabric or other raw materials or a long interruption in shipments from any fabric or other raw material supplier.

Labor union disputes could impact our business.

Approximately 700 of our employees at the factory located in New Bedford, Massachusetts that manufactures our Joseph Abboud clothing are members of Unite Here, a New England based labor union. Also, approximately 290 employees working in the Jos. A. Bank Hampstead, Maryland tailoring overflow shop and distribution centers are represented by the Mid-Atlantic Regional Joint Board, Local 806 and, approximately 120 Jos. A. Bank sales associates in New York City and four surrounding New York counties are represented by Local 340, New York New Jersey Regional Joint Board, Workers United. Should a labor dispute arise, we could experience shortages in product to sell in our stores or disruptions in services provided at our Jos. A. Bank stores.

Risks Associated with Our Information Technology Systems

We rely on various information technology systems to manage our operations. Information technology systems are subject to numerous risks including unanticipated operating problems, system failures, rapid technological change, failure of the systems that operate as anticipated, reliance on third-party computer hardware, network and software providers, computer viruses, telecommunication failures, data breaches, denial of service attacks, spamming, phishing attacks, computer hackers and other similar disruptions, any of which could materially adversely impact our consolidated financial condition and results of operations. Additional risks include, but are not limited to, the following:

If we are unable to operate information systems and implement new technologies effectively, our business could be disrupted or our sales or profitability could be reduced.

The efficient operation of our business is dependent on our information systems, including our ability to operate them effectively and successfully implement new technologies, systems, controls and adequate disaster recovery systems. We also maintain multiple internet websites in the U.S. and a number of other countries. In addition, we must protect the confidentiality of our and our customers' data. The failure of our information systems to perform as designed or our failure to implement and operate them effectively could disrupt our business or subject us to liability and thereby harm our profitability.

We are subject to data security risks, which could have an adverse effect on our results of operations and consumer confidence in our security measures.

We are subject to cybersecurity risks. Cybersecurity refers to the combination of technologies, processes, and procedures established to protect information technology systems and data from unauthorized access, attack, exfiltration, or damage. As part of our normal operations, we maintain and transmit confidential

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information about our customers as well as proprietary information relating to our business operations. While we have implemented measures reasonably designed to prevent security breaches and cyber incidents, our systems or our third-party service providers' systems may still be vulnerable to privacy and security incidents including attacks by unauthorized users, corruption by computer viruses or other malicious software code, emerging cybersecurity risks, inadvertent or intentional release of confidential or proprietary information, or other similar events. The occurrence of any security breach involving the misappropriation, loss or other unauthorized disclosure of information about us or our customers, whether by us or by one of our third-party service providers, could, among other things:

In this respect, credit card companies required businesses that accept their credit cards to implement chip card recognition systems by October 2015. Because of delays caused by vendor software and the certification process of chip technology, we expect to complete the implementation of the chip technology during 2016. As a result, in the event of a data breach before we have the technology in place, we may face liabilities that could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, the storage and transmission of such data is regulated at the international, federal, state and local levels. Privacy and information security laws and regulation changes, and compliance with those changes, may result in cost increases due to system changes and the development of new administrative processes. If we or our employees fail to comply with these laws and regulations or experience a data security breach, our reputation could be damaged, possibly resulting in lost future business, and we could be subjected to fines, penalties, administrative orders and other legal risks as a result of a breach or non-compliance.

Other Risks Affecting Our Business

Our business is subject to numerous other risks that could materially adversely impact our consolidated financial condition and results of operations. These risks include, but are not limited to, the following:

We may be negatively impacted by competition.

Both the men's retail and the corporate apparel industries are highly competitive with numerous participants. We compete with traditional department stores, other specialty men's clothing stores, online retailers, online tuxedo rental providers, off-price retailers, manufacturer-owned and independently-owned outlet stores and their e-commerce channels, independently owned tuxedo rental stores and other corporate apparel providers. In addition, some of our primary competitors sell their products in stores that are located in the same shopping malls or retail centers as our stores, which results in competition for favorable site locations and lease terms in these shopping malls and retail centers. Increased competition or our failure to meet these competitive challenges could result in price reductions, increased marketing expenditures and loss of market share, any of which could have a material adverse effect on our business, financial condition and results of operations.

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Our success significantly depends on our key personnel and our ability to attract and retain key personnel.

Our success depends upon the personal efforts and abilities of our senior management team and other key personnel. Although we believe we have a strong management team with significant industry expertise, we face intense competition in hiring and retaining these personnel and the extended loss of the services of key personnel could have a material adverse effect on our business, financial condition and results of operations.

Also, our continued success and the achievement of our expansion goals are dependent upon our ability to attract and retain additional qualified employees. If we are unable to retain and motivate our current personnel and attract talented new personnel, our business, financial condition and results of operations could be adversely affected.

The occurrence of an event that impacts our reputation could have a material adverse effect on our brands.

Our ability to maintain our reputation is critical to our brands. Our reputation could be jeopardized if we fail to maintain high standards for merchandise quality and integrity and customer service. Any negative publicity about these types of concerns may reduce demand for our merchandise. Failure to comply with ethical, social, product, labor, health and safety or environmental standards could also jeopardize our reputation and potentially lead to various adverse consumer actions, including boycotts. Public perception about our company as a whole, our products or our stores, whether justified or not, could impair our reputation, involve us in litigation, damage our brand and have a material adverse effect on our business. Failure to comply with local laws and regulations, to maintain an effective system of internal controls and provide accurate and timely financial statement information, or to prevent security breaches could also hurt our reputation. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional time and resources to rebuild our reputation.

War, acts of terrorism, public health crises, or weather catastrophes could have a material adverse effect on our business.

In the event of war, acts of terrorism or the threat of terrorist attacks, public health crises, or weather catastrophes, consumer spending could significantly decrease for a sustained period. In addition, local authorities or shopping center management could close in response to any immediate security concern, public health concern or weather catastrophe such as hurricanes, earthquakes, or tornadoes. Similarly, war, acts of terrorism, threats of terrorist attacks, or a weather catastrophe could severely and adversely affect our offices, distribution centers, or our entire supply chain.

Fluctuations in exchange rates may cause us to experience currency exchange losses.

Moores, our Canadian subsidiary, conducts most of its business in Canadian dollars ("CAD") but purchases a significant portion of its merchandise in U.S. dollars. The exchange rate between CAD and U.S. dollars has fluctuated historically. Recently, the value of the CAD against the U.S. dollar has weakened. If this valuation does not improve, then the revenues and earnings of our Canadian operations will be reduced when they are translated to U.S. dollars. Also, the value of our Canadian net assets as expressed in U.S. dollars may decline. Moores utilizes foreign currency hedging contracts related to its merchandise purchases to limit exposure to changes in U.S. dollar/CAD exchange rates; however, these hedging activities may not adequately protect our Canadian operations from exchange rate risk.

Dimensions and Alexandra, our UK-based operations, sell their products and conduct their business primarily in pounds Sterling ("GBP") but purchase most of their merchandise in U.S. dollars or Euros. The exchange rate between the GBP, Euro and U.S. dollar has fluctuated historically. A decline in the value of the GBP as compared to the Euro or U.S. dollar may adversely impact our UK operating results as the cost of merchandise purchases will increase, particularly in relation to longer term customer

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contracts that have little or no pricing adjustment provisions, and the revenues and earnings of our UK operations will be reduced when they are translated to U.S. dollars. Also, the value of our UK net assets as expressed in U.S. dollars may decline. Dimensions and Alexandra may, from time to time, utilize foreign currency hedging contracts as well as price renegotiations to limit exposure to some of this risk; however, these activities may not adequately protect our UK operations from exchange rate risk.

Compliance with changing regulations and standards for accounting, corporate governance, tax and employment laws could result in increased administrative expenses or litigation and could adversely impact our business, results of operations and reported financial results.

Our policies, procedures and internal controls are designed to help us comply with all applicable laws, accounting and reporting requirements, regulations and tax requirements, including those imposed by the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC and the NYSE, as well as applicable employment laws and the health care reform legislation, such as the Affordable Care Act. In addition, our business is subject to rules issued by the payment card industry (PCI), and laws, rules and regulations promulgated by international, national, state and local authorities, including laws, rules and regulations relating to privacy, use of consumer information, credit cards and advertising. All of these laws, rules and regulations and the interpretation thereof are subject to change and often application thereof may be unclear. As a result, from time to time, we are subject to inquiries, investigations, and/or litigation, including class action lawsuits, and administrative actions related to compliance with these laws, rules and regulations.

Shareholder activism, the current political environment, financial reform legislation and the current high level of government intervention and regulatory reform has led, and may continue to lead, to substantial new regulations and compliance obligations. Any changes in regulations, the imposition of additional regulations or the enactment of any new legislation that affects employment and labor, trade, product safety, transportation and logistics, health care, tax, privacy, or environmental issues, among other things, may increase the complexity of the regulatory environment in which we operate and the related cost of compliance.

Failure to comply with the various laws and regulations, as well as changes in laws and regulations, could have an adverse impact on our reputation, financial condition or results of operations.

Changes to accounting standards and estimates could materially impact our results of operations, financial position, and cash flows.

Generally accepted accounting principles and the related authoritative guidance for many aspects of our business, including revenue recognition, inventories, goodwill and intangible assets, leases and income taxes, are complex, continually evolving and involve subjective judgments. For example, recently issued authoritative guidance for lease accounting may have a material adverse effect on our results of operations and financial position or cause the perception that we are more highly leveraged. In addition, as discussed in Note 1 to our consolidated financial statements, we are evaluating the impact of the recently issued revenue standard on our business. These and other future changes in accounting rules or changes in the underlying estimates, assumptions or judgments by our management could have a material impact on our results of operations, financial position and cash flows.

We could incur losses due to impairment on long-lived assets, goodwill and intangible assets.

Under generally accepted accounting principles, we review our long-lived assets for impairment whenever economic events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Identifiable intangible assets with an indefinite useful life, including goodwill, are not amortized but are evaluated annually for impairment. A more frequent evaluation is performed if events or circumstances indicate that impairment could have occurred. In fiscal 2015, we recorded $1.24 billion of goodwill and intangible asset impairment charges related to Jos. A. Bank. In the future, significant

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negative industry or general economic trends, disruptions to our business and unexpected significant changes or planned changes in our use of the assets may result in additional impairments to our goodwill, intangible assets and other long-lived assets. Any reduction in or impairment of the value of goodwill or intangible assets will result in a charge against earnings, which could have a material adverse impact on our reported results of operations and financial condition.

Our advertising, marketing and promotional activities have been the subject of review by state regulators and subject to lawsuits, specifically at Jos. A. Bank.

Jos. A. Bank has in the past been, and may from time to time in the future be, required to respond to inquiries from State Attorneys General related to its advertising practices. In addition, it is possible that the advertising, marketing and promotional activities of our other brands may be reviewed by state or other regulators. Although we endeavor to monitor and comply with all applicable laws and regulations to ensure that all advertising, marketing and promotional activities comply with all applicable legal requirements, many of the applicable legal requirements involve subjective judgments. It is possible that any resolution we may reach with any governmental authority may materially impact our current or future planned marketing program and could have an adverse impact on our business.

Rights of our shareholders may be negatively affected if we issue any of the shares of preferred stock which our Board of Directors has authorized for issuance.

We have available for issuance 2,000,000 shares of preferred stock, par value $.01 per share. Our Board of Directors is authorized to issue any or all of this preferred stock, in one or more series, without any further action on the part of shareholders. The rights of our shareholders may be negatively affected if we issue a series of preferred stock in the future that has preference over our common stock with respect to the payment of dividends or distribution upon our liquidation, dissolution or winding up. See Note 13 of Notes to Consolidated Financial Statements for more information.

Risks Associated with Our Indebtedness

There are numerous risks associated with our indebtedness including, but not limited to, the following:

Our current level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under the Credit Facilities or the indenture governing the Senior Notes.

In connection with the acquisition of Jos A. Bank, we entered into a $1.1 billion aggregate principal amount senior secured facility (the "Term Loan Facility") and a $500.0 million asset-based revolving facility (the "ABL Facility" together with the Term Loan Facility, the "Credit Facilities"). In addition, we issued $600.0 million in aggregate principal amount of our 7.0% Senior Notes due 2022 (the "Senior Notes"). After entering into the Credit Facilities and completing the offering of the Senior Notes, our indebtedness has increased substantially. As of January 30, 2016, our total indebtedness is approximately $1,655.9 million. In addition, we have up to $420.9 million of additional borrowing availability under the ABL Facility, excluding letters of credit totaling approximately $25.5 million issued and outstanding.

Our indebtedness could have important consequences, including:

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Despite our high indebtedness level, we will still be able to incur significant additional amounts of debt, which could exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the Credit Facilities and the indenture governing the Senior Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. If new debt is added to our and our subsidiaries' existing debt levels, the related risks that we now face would increase. In addition, the Credit Facilities and the indenture governing the Senior Notes will not prevent us from incurring obligations that do not constitute indebtedness under those agreements. As of January 30, 2016, we have up to $420.9 million of additional borrowing availability under the ABL Facility, excluding letters of credit totaling approximately $25.5 million issued and outstanding.

We may not be able to generate sufficient cash to service all of our indebtedness and fund our working capital and capital expenditures, and we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on our indebtedness will depend upon our future operating performance and on our ability to generate cash flow in the future, which is subject to general economic, financial, business, competitive, legislative, regulatory and other factors that are beyond our control. There can be no assurance that our business will generate sufficient cash flow from operations, or that future borrowings, including borrowings under the ABL Facility, will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investment and capital expenditures or to dispose of material assets or operations, seek additional equity capital or restructure or refinance our indebtedness. We may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. The Credit Facilities and the indenture that governs the Senior Notes contain restrictions on our ability to dispose of assets and use the proceeds from any such disposition.

In addition, we rely, to a certain extent, on our subsidiaries to generate cash. Accordingly, repayment of our indebtedness, is dependent, to a certain extent, on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Each of our subsidiaries are distinct legal entities and they do not have any obligation to pay amounts due on the notes or to make funds available for that purpose (other than the subsidiary guarantors in connection with their

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guarantees) or other obligations in the form of loans, distributions or otherwise. Our subsidiaries may not generate sufficient cash from operations to enable us to make principal and interest payments on our indebtedness or to fund our and our subsidiaries' other cash obligations.

For example, at January 30, 2016, cash and cash equivalents held by foreign subsidiaries totaled $27.0 million. Under current tax laws and regulations, if cash and cash equivalents held outside the U.S. are repatriated to the U.S., in certain circumstances we may be subject to additional U.S. income taxes and foreign withholding taxes. We currently do not intend to repatriate amounts held by foreign subsidiaries. As such, amounts held by our foreign subsidiaries are not expected to be available to repay our indebtedness.

If we cannot make scheduled payments on our debt, we will be in default and, as a result, the holders of the Senior Notes could declare all outstanding principal and interest to be due and payable, the lenders under the Credit Facilities could declare all outstanding amounts under such facilities due and payable and, with respect to the ABL Facility, terminate their commitments to loan money, and, in each case, foreclose against the assets securing the borrowings under the Credit Facilities, and we could be forced into bankruptcy or liquidation.

If our indebtedness is accelerated, we may need to refinance all or a portion of our indebtedness before maturity. There can be no assurance that we will be able to refinance any of our indebtedness, including the Credit Facilities, on commercially reasonable terms or at all. There can be no assurance that we will be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.

The agreements and instruments governing our debt impose restrictions that may limit our operating and financial flexibility.

The Credit Facilities and the indenture governing the Senior Notes contain a number of significant restrictions and covenants that may limit our ability to:

These covenants could have the effect of limiting our flexibility in planning for or reacting to changes in our business and the markets in which we compete. In addition, the ABL Facility requires us to comply with a financial maintenance covenant under certain circumstances. Operating results below current levels or other adverse factors, including a significant increase in interest rates, could result in our being unable to comply with the financial covenants contained in the ABL Facility, if applicable. If we violate this covenant and are unable to obtain a waiver from our lenders, our debt under the ABL Facility would be in default and could be accelerated by our lenders. Because of cross-default provisions in the agreements and instruments governing our indebtedness, a default under one agreement or instrument could result in a default under, and the acceleration of, our other indebtedness. In addition, the lenders under the Credit Facilities could proceed against the collateral securing that indebtedness.

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If our indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, on terms that are acceptable to us, or at all. If our debt is in default for any reason, our business, financial condition and results of operations could be materially and adversely affected. In addition, complying with these covenants may also cause us to take actions that make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

We are exposed to interest rate risk through our variable rate borrowings under the Credit Facilities. Borrowings under such facilities bear interest at a variable rate, based on an adjusted LIBOR rate, plus an applicable margin. Interest rates are currently at relatively low levels. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Assuming all capacity under the ABL Facility is fully drawn, each one percentage point change in interest rates would result in approximately a $5.0 million change in annual interest expense. Assuming LIBOR surpassed the 1% LIBOR floor provision on our Term Loan, we would be exposed to interest rate risk on such Term Loan. To partially mitigate such interest rate risk, we entered into an interest rate swap to exchange variable interest rate payments for fixed interest rate payments for a portion of the outstanding Term Loan balance. In addition, we entered into the Incremental Facility Agreement No. 1 to the credit agreement governing the Term Loan to refinance $400.0 million principal amount of term loans that bore interest at a variable rate with $400.0 million principal amount of new term loans, which bear interest at a fixed rate of 5.0% per annum. After consideration of the swap and the refinancing, each one percentage point change in interest rates would result in an approximate $2.4 million change in annual interest expense on our Term Loan.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.    PROPERTIES

As of January 30, 2016, we operated 1,600 retail apparel and tuxedo rental stores in 50 states, the District of Columbia and Puerto Rico and 124 retail apparel stores in ten Canadian provinces. As of January 30, 2016, our stores aggregated approximately 10.0 million square feet. Almost all of these stores are leased, generally for five to ten year initial terms with one or more renewal options after our initial term. The following tables set forth the location, by state, territory or province, of these stores:

United States
  Men's
Wearhouse(1)
  Men's
Wearhouse
and Tux
  Tuxedo
Shops @
Macy's
  Jos. A.
Bank
  K&G   Total  

Texas

    62     1     5     57     11     136  

California

    81     9     3     38     1     132  

Florida

    49     17           47     5     118  

Illinois

    32     13           30     6     81  

New York

    43     4           29     4     80  

Pennsylvania

    29     9           32     3     73  

New Jersey

    18     5     4     33     5     65  

Maryland

    18     9           27     6     60  

Massachusetts

    23     10           24     3     60  

Ohio

    24     6           24     5     59  

Virginia

    20     8           28     3     59  

Georgia

    20     4           26     5     55  

Michigan

    23     10           15     7     55  

North Carolina

    18     8           26     3     55  

Connecticut

    12     3           15     2     32  

Tennessee

    14     4           12     2     32  

Alabama

    10     3           15     1     29  

Colorado

    14     1           11     3     29  

Indiana

    12     3           12     2     29  

Minnesota

    13     4           9     2     28  

Missouri

    12     3           12     1     28  

South Carolina

    10     5           11     1     27  

Arizona

    15     1           9           25  

Washington

    15     1           7     2     25  

Wisconsin

    13     4           7     1     25  

Louisiana

    11     5           4     3     23  

Kentucky

    7     3           8           18  

Kansas

    6     2           5     1     14  

Oregon

    11                 2           13  

Utah

    9                 4           13  

Iowa

    9                 3           12  

Oklahoma

    5                 6     1     12  

Nevada

    6     1           3           10  

New Hampshire

    5     1           4           10  

Arkansas

    5                 4           9  

Mississippi

    5                 4           9  

District of Columbia

    2                 5           7  

Nebraska

    4                 3           7  

Rhode Island

    1     2           4           7  

Delaware

    3                 3           6  

New Mexico

    4                 2           6  

West Virginia

    2                 3           5  

Idaho

    3                 1           4  

Maine

    2                 1           3  

North Dakota

    3                             3  

South Dakota

    2     1                       3  

Alaska

    2                             2  

Montana

    2                             2  

Puerto Rico

    2                             2  

Hawaii

    1                             1  

Vermont

    1                             1  

Wyoming

    1                             1  

Total

    714     160     12     625     89     1,600  

(1)
Includes one Joseph Abboud store in New York.

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Canada
  Moores  

Ontario

    54  

Quebec

    23  

British Columbia

    16  

Alberta

    15  

Manitoba

    5  

Nova Scotia

    4  

New Brunswick

    3  

Saskatchewan

    2  

Newfoundland

    1  

Prince Edward Island

    1  

Total

    124  

We own or lease properties in various parts of the U.S. and Canada to facilitate the distribution of retail and rental product to our stores. We own or lease properties in Houston, Texas, Hampstead and Eldersburg, Maryland and, to facilitate the distribution of our corporate apparel product, various parts of the UK. Total leased and owned space for distribution is approximately 2.2 million square feet and 2.8 million square feet, respectively.

In addition, we have primary office locations in Houston, Texas, Fremont, California, New York, New York and Hampstead, Maryland with additional satellite offices in other parts of the U.S., Canada and Europe. We lease approximately 0.5 million square feet and own approximately 0.3 million square feet of office space.

ITEM 3.    LEGAL PROCEEDINGS

We are involved in various routine legal proceedings, including ongoing litigation. Management believes that none of these matters will have a material adverse effect on our financial position, results of operations or cash flows. See Note 18 of Notes to Consolidated Financial Statements for a discussion of our legal proceedings.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Through January 30, 2016, our common stock traded on the NYSE under the symbol "MW". Beginning on February 1, 2016, Tailored Brands replaced Men's Wearhouse as the publicly held corporation and its common stock trades on the NYSE under the trading symbol "TLRD".

The following table sets forth, on a per share basis for the periods indicated, the high and low sale prices per share for our common stock as reported by the NYSE and the quarterly dividends declared on each share of common stock:

 
  High   Low   Dividend  

Fiscal Year 2015

                   

First quarter

  $ 57.83   $ 45.89   $ 0.18  

Second quarter

    66.18     56.88     0.18  

Third quarter

    60.02     37.46     0.18  

Fourth quarter

    41.94     9.95     0.18  

Fiscal Year 2014

   
 
   
 
   
 
 

First quarter

  $ 58.80   $ 41.89   $ 0.18  

Second quarter

    59.07     47.08     0.18  

Third quarter

    55.45     43.13     0.18  

Fourth quarter

    48.86     39.77     0.18  

On March 18, 2016, there were approximately 880 shareholders of record and approximately 13,000 beneficial shareholders of our common stock.

The cash dividend of $0.18 per share declared by our Board of Directors (the "Board") in January 2016 is payable on March 25, 2016 to shareholders of record on March 15, 2016.

The Credit Facilities and the indenture governing the Senior Notes contain covenants that, among other things, limit the Company's ability to pay dividends on the Company's common stock in excess of $10.0 million per quarter. See Note 6 of Notes to Consolidated Financial Statements for additional information on our financing arrangements.

The information required by this item regarding securities authorized for issuance under equity compensation plans is incorporated by reference from Item 12 of this Form 10-K.

Issuer Purchases of Equity Securities

We did not purchase any of our equity securities during the fourth quarter of fiscal 2015. In March 2013, the Board approved a $200.0 million share repurchase program for our common stock, which amended and replaced the Company's then existing share repurchase program authorized in January 2011. At January 30, 2016, the remaining balance available under the Board's March 2013 authorization was $48.0 million.

Sales of Unregistered Securities

During fiscal 2015 and 2014, we issued 8,804 and 8,805 shares of common stock, respectively, to Joseph Abboud pursuant to the terms of the consulting agreement between the Company and Mr. Abboud. The shares of common stock were not registered under the Securities Act of 1933, as amended (the "Securities Act") pursuant to the exemption from registration requirements provided by Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving a public offering. The offering was not a "public offering" as defined in Section 4(a)(2) due to the insubstantial number of persons involved in the transaction, size of the offering, manner of the offering and number of securities offered.

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Performance Graph

The following Performance Graph and related information shall not be deemed "soliciting material" or to be "filed" with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.

The following graph compares, as of each of the dates indicated, the percentage change in the Company's cumulative total shareholder return on the Common Stock with the cumulative total return of the S&P 500 Index and a subset of companies in the S&P Retail Select Index ("Select Group").

The graph assumes that the value of the investment in our Common Stock and each index was $100 at January 29, 2011 and that all dividends paid by those companies included in the indices were reinvested.

GRAPHIC

 
  January 29,
2011
  January 28,
2012
  February 2,
2013
  February 1,
2014
  January 31,
2015
  January 30,
2016
 

Measurement Period (Fiscal Year Covered)

                                     

The Men's Wearhouse, Inc. 

  $ 100.00   $ 133.75   $ 120.31   $ 194.07   $ 190.52   $ 57.50  

S&P 500 Index

    100.00     104.22     121.71     147.89     168.93     167.81  

Select Group(1)

    100.00     125.50     163.61     184.65     220.75     224.14  

(1)
For purposes of this graph, the select group currently consists of the following companies: Abercrombie & Fitch Co., American Eagle Outfitters, Inc., Ascena Retail Group, Inc., Caleres, Inc., Chico's FAS, Inc., Citi Trends, Inc., DSW, Inc., Express, Inc., Finish Line, Inc., Foot Locker, Inc., Francesca's Holdings Corporation, Genesco, Inc., Guess?, Inc., L Brands, Inc., Ross Stores, Inc., The Buckle, Inc., The Cato Corporation, The Children's Place, Inc., The Gap, Inc., The TJX Companies, Inc., Urban Outfitters, Inc. and Zumiez, Inc.

The foregoing graph is based on historical data and is not necessarily indicative of future performance.

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ITEM 6.    SELECTED FINANCIAL DATA

The following selected statement of (loss) earnings, balance sheet and cash flow information for the fiscal years indicated has been derived from our audited consolidated financial statements. The Selected Financial Data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and notes thereto. References herein to years are to the Company's 52-week or 53-week fiscal year, which ends on the Saturday nearest January 31 in the following calendar year. For example, references to "2015" mean the fiscal year ended January 30, 2016. All fiscal years for which financial information is included herein had 52 weeks with the exception of fiscal 2012, which ended on February 2, 2013 and had 53 weeks.

As a result of the acquisitions of Jos. A. Bank on June 18, 2014 and JA Holding on August 6, 2013, the statements of (loss) earnings data and cash flow information below for the years ended January 30, 2016, January 31, 2015, and February 1, 2014, include the results of operations and cash flows, since each respective acquisition date. In addition, the balance sheet information below as of January 30, 2016, January 31, 2015, and February 1, 2014 includes the fair values of the assets acquired and liabilities assumed as of the acquisition date for Jos. A. Bank and JA Holding, respectively.

 
  2015   2014   2013   2012   2011  
 
  (Dollars and shares in thousands, except per share and per
square foot data)

 

Statement of (Loss) Earnings Data:

                               

Total net sales

  $ 3,496,271   $ 3,252,548   $ 2,473,233   $ 2,488,278   $ 2,382,684  

Total gross margin

    1,484,423     1,358,614     1,089,010     1,108,148     1,048,927  

Goodwill and intangible asset impairment charges(1)

    1,243,354         11,349          

Operating (loss) income

    (1,077,296 )   73,210     129,628     198,568     185,432  

Net (loss) earnings attributable to common shareholders

    (1,026,719 )   (387 )   83,791     131,716     120,601  

Per Common Share Data:

                               

Diluted net (loss) earnings per common share attributable to common shareholders

  $ (21.26 ) $ (0.01 ) $ 1.70   $ 2.55   $ 2.30  

Cash dividends declared

  $ 0.72   $ 0.72   $ 0.72   $ 0.72   $ 0.54  

Weighted-average common shares outstanding—diluted

    48,288     47,899     49,162     51,026     51,692  

Operating Information:

   
 
   
 
   
 
   
 
   
 
 

Percentage increase/(decrease) in comparable sales(2):

                               

Men's Wearhouse

    4.9 %   3.9 %   0.7 %   4.8 %   9.1 %

Jos. A. Bank

    (16.4 )%                

Moores

    (1.7 )%   8.6 %   (4.1 )%   1.5 %   4.5 %

K&G

    5.0 %   3.7 %   (5.5 )%   (4.3 )%   3.6 %

Average net sales per square foot(3):

   
 
   
 
   
 
   
 
   
 
 

Men's Wearhouse

  $ 411   $ 399   $ 386   $ 389   $ 376  

Jos. A. Bank

  $ 255                  

Moores

  $ 370   $ 372   $ 345   $ 361   $ 358  

K&G

  $ 160   $ 152   $ 145   $ 153   $ 157  

Average square footage(4):

   
 
   
 
   
 
   
 
   
 
 

Men's Wearhouse

    5,642     5,667     5,710     5,721     5,705  

Men's Wearhouse and Tux

    1,397     1,387     1,387     1,372     1,384  

Jos. A. Bank

    4,609     4,595              

Moores

    6,289     6,334     6,358     6,362     6,339  

K&G

    23,619     23,784     23,710     23,704     23,750  

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  2015   2014   2013   2012   2011  
 
  (Dollars in thousands)
 

Number of retail stores:

                               

Open at beginning of the period

    1,758     1,124     1,143     1,166     1,192  

Acquired from Jos. A. Bank(5)

        624              

Opened

    42     60     25     37     25  

Closed

    (76 )   (50 )   (44 )   (60 )   (51 )

Open at end of the period

    1,724     1,758     1,124     1,143     1,166  

Men's Wearhouse(6)

    714     698     661     638     607  

Men's Wearhouse and Tux

    160     210     248     288     343  

Tuxedo Shops @ Macy's

    12                  

Jos. A. Bank(5)

    625     636              

Moores

    124     123     121     120     117  

K&G

    89     91     94     97     99  

Total

    1,724     1,758     1,124     1,143     1,166  

Cash Flow Information:

                               

Capital expenditures

  $ 115,498   $ 96,420   $ 108,200   $ 121,433   $ 91,820  

Depreciation and amortization

    132,329     112,659     88,749     84,979     75,968  

Repurchases of common stock

    277     251     152,129     41,296     63,988  

 

 
  January 30,
2016
  January 31,
2015
  February 1,
2014
  February 2,
2013
  January 28,
2012
 

Balance Sheet Information:

                               

Cash and cash equivalents

  $ 29,980   $ 62,261   $ 59,252   $ 156,063   $ 125,306  

Inventories

    1,022,504     938,336     599,486     556,531     572,502  

Working capital

    723,593     752,261     479,808     560,970     544,108  

Total assets

    2,244,319     3,508,212     1,555,230     1,496,347     1,405,952  

Long-term debt, including current portion

    1,655,924     1,648,686     97,500          

Total (deficit) equity

    (100,086 )   969,789     1,023,149     1,109,235     1,031,819  

(1)
See Note 3 to the consolidated financial statements for additional information.

(2)
Comparable sales data is calculated by excluding the net sales of a store for any month of one period if the store was not owned or open throughout the same month of the prior period and, beginning in 2013, include e-commerce net sales. We operate our business using an omni-channel approach and do not differentiate e-commerce sales from our other channels. Comparable sales percentages for Moores are calculated using Canadian dollars. Comparable sales for Jos. A. Bank are calculated in the same manner as our other brands except that it is based on Jos. A. Bank's entire fiscal 2014, a portion of which was prior to our acquisition on June 18, 2014.

(3)
Average net sales per square foot is calculated by dividing total square footage for all stores owned or open the entire year into net sales for those stores. The calculation for Men's Wearhouse includes Men's Wearhouse and Tux stores. The calculation for Moores is based upon the Canadian dollar. For fiscal 2012, the calculation excludes total sales for the 53rd week.

(4)
Average square footage is calculated by dividing the total square footage for all stores open at the end of the period by the number of stores open at the end of such period.

(5)
For 2015 and 2014 excludes 14 and 15 franchise stores, respectively.

(6)
For 2015, includes one Joseph Abboud store.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Background

Effective January 31, 2016, Tailored Brands, Inc., a Texas corporation ("Tailored Brands"), became the successor reporting company to The Men's Wearhouse, Inc., pursuant to a holding company reorganization. We believe that the holding company structure will allow us to support, nurture and augment our family of brands as we further leverage our shared services platform. As a result, beginning in the first quarter of 2016, we implemented legal and operational changes in how we manage our business, including resource allocation and performance assessment. In future periods, we expect to report three operating segments: retail, corporate apparel and shared services.

We are the largest specialty retailer of men's suits and the largest provider of rental product in the U.S. and Canada with 1,724 stores including tuxedo shops within Macy's stores. Our operations are conducted in two reportable segments, retail and corporate apparel, based on the way we manage, evaluate and internally report our business activities. Refer to Item 1, "Business" of this Annual Report on Form 10-K as well as Note 17 of Notes to Consolidated Financial Statements and the discussion included in "Results of Operations" below for additional information and disclosures regarding our reporting segments.

On June 10, 2015, we entered into a 10-year agreement with Macy's, Inc. to operate men's tuxedo rental shops inside 300 Macy's stores. As of January 30, 2016, we operated 12 tuxedo shops within Macy's stores under the name "The Tuxedo Shop @ Macy's." We have refined our Tuxedo Shop @ Macy's rollout schedule and now plan to open 166 stores in 2016 with the balance of 122 stores to be opened in 2017. In addition, we will collaborate with Macy's to develop an online tuxedo rental shop.

On June 18, 2014, we acquired 100% of the outstanding common stock of Jos. A. Bank, a men's specialty apparel retailer, for $65.00 net per share in cash, or total consideration of approximately $1.8 billion. As a result, the comparability of our results is affected by the inclusion of Jos. A. Bank's results for the entire fiscal year ended January 30, 2016, while last year's operations include Jos. A. Bank's results beginning on June 18, 2014.

Summary of Financial Performance

Our fiscal 2015 operating performance was negatively impacted by (i) goodwill and intangible asset impairment charges related to our Jos. A. Bank brand, (ii) restructuring and other charges resulting primarily from our store rationalization program which identified approximately 250 stores to be closed in fiscal 2016, and (iii) a decrease in revenues and profitability at our Jos. A. Bank brand primarily driven by our decision to remove the most excessive promotional offers (the Buy-One-Get-Three Free or more events). In order to mitigate the impact of our decision to remove the most excessive promotional offers at Jos. A. Bank, we introduced new promotional offers that do not require excessive quantity purchases and are better aligned with how our customers have told us they prefer to shop. Our customer research indicates while our existing customers appreciate our quality and value, many dislike being forced to buy in quantity and many of our prospective Jos. A. Bank customers found our promotional offers confusing and caused them to question the quality of our products. By contrast, in fiscal 2015, our Men's Wearhouse/Men's Wearhouse and Tux ("Men's Wearhouse") brand performed well, generating a comparable sales increase of 4.9%, with clothing comparable sales of 6.8%, partially offset by a rental service comparable sales decrease of 0.7%.

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Key operating metrics for the year ended January 30, 2016 include:

Key liquidity metrics for the year ended January 30, 2016 include:

Items Affecting Comparability of Results

The comparability of our results has been impacted by certain items, primarily related to impairment of Jos. A. Bank's goodwill and other intangible assets, restructuring and other costs primarily reflecting costs related to our store rationalization program and acquisition and integration costs for Jos. A. Bank. A summary of the effect of these items on pretax income for each applicable fiscal year is presented below (dollars in millions):

 
  Fiscal Year  
 
  2015   2014   2013  

Impairment of Jos. A. Bank goodwill and intangible assets

  $ 1,243.4   $   $  

Restructuring and other charges, primarily related to our store rationalization program

    35.9          

Acquisition and integration costs related to Jos. A. Bank

    18.7     95.0      

Purchase accounting adjustment for the step up of Jos. A. Bank inventory

    0.9     33.5      

Other purchase accounting related charges

    9.8     5.4      

Costs related to a JA Holding licensee arbitration award

        42.6      

Acquisition and integration costs related to JA Holding

        3.7     6.7  

Loss on extinguishment of debt related to Jos. A. Bank financing arrangements

    12.7     2.2      

Impairment of K&G goodwill

            9.5  

Other costs including various strategic projects, separation costs with former executives, cost reduction initiatives and asset impairment charges(1)

    7.1     4.2     22.6  

Total

  $ 1,328.5   $ 186.6   $ 38.8  

(1)
Includes $1.8 million gain on the sale of property in 2015, $3.4 million gain on settlement of litigation in 2014 and $2.2 million gain on the sale of an office building in 2013.

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2016 Initiatives

During the fourth quarter of fiscal 2015, we began implementing multiple initiatives intended to reduce costs and improve operating performance. These initiatives include a store rationalization program which identified approximately 250 stores to be closed as well as a profit improvement program to drive operating efficiencies and improve our expense structure. The store rationalization program includes the closure of approximately 80 to 90 Jos. A. Bank full line stores, the closure of all outlet stores at Jos. A. Bank and Men's Wearhouse (58 stores) and the closure of between 100 and 110 Men's Wearhouse and Tux stores primarily as the result of the rollout of our shops within Macy's stores. We expect the store rationalization and profit improvement programs to be completed in fiscal 2016.

We expect the profit improvement program to reduce our expenses by approximately $50.0 million in fiscal 2016. This program includes reduced distribution costs, cost reductions in our organizational structure, payroll and employee benefit reductions and savings in occupancy and goods-not-for-resale.

We estimate the cash costs to complete the store rationalization and profit improvement programs to be between $45.0 and $60.0 million in fiscal 2016, primarily consisting of lease termination costs and consulting and severance costs.

Store Information

During fiscal 2015, we opened 42 stores/tuxedo shops (18 Men's Wearhouse stores, 12 shops within Macy's stores, eight Jos. A. Bank stores, two Moores stores, one Joseph Abboud store and one K&G store) and closed 76 stores (50 Men's Wearhouse and Tux stores, 19 Jos. A. Bank stores, three Men's Wearhouse stores, three K&G stores and one Moores store).

In fiscal 2016, we plan to open 166 shops within Macy's stores, 15 to 20 Men's Wearhouse stores, three Moores stores, two Jos. A. Bank stores and two K&G stores and to expand and/or relocate approximately 8 to 12 existing Men's Wearhouse stores, four to eight existing Jos. A. Bank stores and one existing K&G store. We also plan to close 130 to 140 Jos. A. Bank stores, 100 to 110 Men's Wearhouse and Tux stores and 10 Men's Wearhouse stores.

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Results of Operations

The following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated:

 
  Fiscal Year(1)  
 
  2015   2014   2013  

Net sales:

                   

Retail clothing product

    74.4 %   72.7 %   67.4 %

Rental services

    12.7     13.6     16.7  

Alteration and other services

    6.0     5.7     5.9  

Total retail sales

    93.0     92.1     90.0  

Corporate apparel clothing product

    7.0     7.9     10.0  

Total net sales

    100.0 %   100.0 %   100.0 %

Cost of sales(2):

                   

Retail clothing product

    44.6     46.4     44.5  

Rental services

    17.3     19.2     15.6  

Alteration and other services

    69.7     71.8     77.4  

Occupancy costs

    14.0     13.2     13.1  

Total retail cost of sales

    56.5     57.2     54.4  

Corporate apparel clothing product

    71.1     70.2     70.2  

Total cost of sales

    57.5     58.2     56.0  

Gross margin(2):

                   

Retail clothing product

    55.4     53.6     55.5  

Rental services

    82.7     80.8     84.4  

Alteration and other services

    30.3     28.2     22.6  

Occupancy costs

    (14.0 )   (13.2 )   (13.1 )

Total retail gross margin

    43.5     42.8     45.6  

Corporate apparel clothing product

    28.9     29.8     29.8  

Total gross margin

    42.5     41.8     44.0  

Advertising expense

    5.9     5.2     4.1  

Selling, general and administrative expenses

    31.1     34.3     34.2  

Goodwill and intangible asset impairment charges

    35.6         0.5  

Asset impairment charges

    0.8     0.0     0.0  

Operating (loss) income

    (30.8 )   2.3     5.2  

Interest income

    0.0     0.0     0.0  

Interest expense

    (3.0 )   (2.0 )   (0.1 )

Loss on extinguishment of debt

    (0.4 )   (0.1 )    

(Loss) earnings before income taxes

    (34.2 )   0.2     5.1  

(Benefit) provision for income taxes

    (4.8 )   0.2     1.7  

Net (loss) earnings including non-controlling interest

    (29.4 )   (0.0 )   3.4  

Net earnings attributable to non-controlling interest

        0.0     0.0  

Net (loss) earnings attributable to common shareholders

    (29.4 )%   (0.0 )%   3.4 %

(1)
Percentage line items may not sum to totals due to the effect of rounding.

(2)
Calculated as a percentage of related sales.

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2015 Compared with 2014

Total net sales increased $243.7 million, or 7.5%, to $3,496.3 million for fiscal 2015 as compared to fiscal 2014.

Total retail sales increased $257.3 million, or 8.6%, to $3,252.5 million for fiscal 2015 as compared to fiscal 2014 due mainly to $182.9 million of incremental net sales from Jos. A. Bank, as fiscal 2015 includes full year results from Jos. A. Bank while fiscal 2014 represented results only from the date of acquisition. Total retail sales also increased due to retail clothing product and alteration revenues from our other brands of $81.2 million partially offset by a decrease in rental services revenue from our other brands of $8.3 million. The net increase is attributable to the following:

(in millions)
  Amount attributed to
$ 182.9   Increase in net sales from Jos. A. Bank.
  76.4   4.9% increase in comparable sales at Men's Wearhouse.
  (3.6 ) 1.7% decrease in comparable sales at Moores.(1)
  15.5   5.0% increase in comparable sales at K&G.
  28.9   Increase from net sales of stores opened in 2014, relocated stores and expanded stores not included in comparable sales.(2)
  13.0   Increase in net sales from new stores opened in 2015.(2)
  (30.8 ) Decrease in net sales resulting from closed stores.
  (35.9 ) Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
  10.9   Other.(2)
$ 257.3   Increase in total retail sales.

(1)
Comparable sales percentages for Moores are calculated using Canadian dollars.

(2)
Excludes Jos. A. Bank.

Comparable sales for Men's Wearhouse, Jos. A. Bank, Moores and K&G exclude the net sales of a store for any month of one period if the store was not open throughout the same month of the prior period and include e-commerce net sales. We operate our business using an omni-channel approach and do not differentiate e-commerce sales from our other channels.

The increase at Men's Wearhouse resulted primarily from increased average unit retails (net selling prices) and average transactions per store that more than offset decreased units sold per transaction. The decrease at Moores was driven by decreased average transactions per store and units sold per transaction that more than offset increased average unit retails. The increase at K&G was driven by increased average transactions per store and units sold per transaction while average unit retails were flat. At Men's Wearhouse, rental service comparable sales decreased 0.7% primarily due to a decrease in unit rentals partially offset by an increase in rental rates.

Comparable sales for Jos. A. Bank decreased by 16.4% and are calculated in the same manner as our other brands except that it is based on Jos. A. Bank's entire fiscal 2014, a portion of which was prior to our acquisition on June 18, 2014.

Total corporate apparel clothing product sales decreased $13.6 million to $243.8 million for fiscal 2015 as compared to fiscal 2014. UK corporate apparel sales decreased $11.7 million due to unfavorable currency fluctuations this year compared to last year. U.S. corporate apparel sales decreased $1.9 million due primarily to decreased sales from existing customer programs.

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Buying and distribution costs are included in determining our retail and corporate apparel clothing product gross margins. Our gross margin may not be comparable to other specialty retailers, as some companies exclude costs related to their distribution network from cost of goods sold while others, like us, include all or a portion of such costs in cost of goods sold and exclude them from SG&A expenses. Distribution costs are not included in determining our rental services gross margin as these costs are included in SG&A expenses.

Our total gross margin increased $125.8 million, or 9.3%, to $1,484.4 million for fiscal 2015 as compared to fiscal 2014. During fiscal 2015, as a result of our store rationalization program, we incurred $11.0 million of inventory write-offs as well as a $4.8 million charge related to discontinued rental product, both of which negatively impacted our gross margin results. During fiscal 2014, $33.5 million of inventory valuation step up related to Jos. A. Bank and a $10.6 million charge to rationalize our rental product to allow for more productive rental styles were incurred and negatively impacted our gross margin results.

Total retail segment gross margin increased $132.2 million or 10.3% from fiscal 2014 to $1,414.1 million in fiscal 2015. The dollar increase in gross margin was primarily driven by $98.0 million of incremental gross margin generated by Jos. A. Bank as well as by higher sales from our Men's Wearhouse brand.

For the retail segment, total gross margin as a percentage of related sales increased from 42.8% in fiscal 2014 to 43.5% in fiscal 2015 driven primarily by an increase in the rental services margin as well as a higher retail clothing product gross margin rate, which was negatively impacted last year by the inventory step up at Jos. A. Bank.

Occupancy costs increased $60.0 million primarily due to incremental Jos. A. Bank occupancy costs. Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, increased from 13.2% in fiscal 2014 to 14.0% in fiscal 2015, primarily due to deleveraging of occupancy costs at Jos. A. Bank as well as Jos A. Bank's occupancy costs being higher as a percentage of sales than our other brands.

Corporate apparel gross margin decreased $6.4 million or 8.3% from fiscal 2014 to $70.3 million in fiscal 2015. For the corporate apparel segment, total gross margin as a percentage of related sales decreased from 29.8% in fiscal 2014 to 28.9% in fiscal 2015 primarily due to unfavorable currency impacts at our UK operations.

Advertising expense increased to $205.0 million in fiscal 2015 from $168.3 million in fiscal 2014, an increase of $36.7 million or 21.8%. The increase was primarily due to incremental Jos. A. Bank advertising costs as well as increased advertising expense to support branding initiatives. As a percentage of total net sales, these expenses increased from 5.2% in fiscal 2014 to 5.9% in fiscal 2015.

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SG&A expenses decreased to $1,085.9 million in fiscal 2015 from $1,116.8 million in fiscal 2014, a decrease of $30.9 million or 2.8%. As a percentage of total net sales, these expenses decreased from 34.3% in fiscal 2014 to 31.1% in fiscal 2015. The components of this 3.2% net decrease in SG&A expenses as a percentage of total net sales and the related dollar changes were as follows:

 
  %   in millions   Attributed to
      (2.2 ) $ (69.4 ) Decrease in acquisition, integration and other costs as a percentage of sales from 2.8% in fiscal 2014 to 0.6% in fiscal 2015. For fiscal 2015, these costs totaled $22.7 million, related primarily to Jos. A. Bank acquisition and integration costs, separation costs with former executives and costs associated with our profit improvement plan, partially offset by a $1.8 million gain on the sale of property. For fiscal 2014, such costs totaled $92.1 million related primarily to Jos. A. Bank acquisition and integration costs and other cost reduction initiatives, partially offset by a $3.4 million favorable litigation settlement.
      (1.3 )   (42.6 ) Decrease in expense of $42.6 million related to an arbitration award last year.
      0.1     4.5   Increase in amortization of intangible assets as a percentage of sales from 0.3% in fiscal 2014 to 0.4% in fiscal 2015. Amortization of intangible assets in dollars increased primarily due to intangible asset amortization recorded in connection with the Jos. A. Bank acquisition.
      0.5     46.4   Increase in store salaries as a percentage of sales from 12.2% in fiscal 2014 to 12.7% in fiscal 2015. Store salaries in dollars increased primarily due to the impact of Jos. A. Bank store salaries and higher commissions at Men's Wearhouse resulting from higher sales.
      (0.3 )   30.2   Decrease in other SG&A expenses as a percentage of sales from 17.7% in fiscal 2014 to 17.4% in fiscal 2015. Other SG&A expenses in dollars increased primarily due to incremental other SG&A expenses for Jos. A. Bank as well as increased employee related and non-store payroll costs.
      (3.2 ) $ (30.9 ) Total

In the retail segment, SG&A expenses as a percentage of related net sales decreased from 35.1% in fiscal 2014 to 31.5% in fiscal 2015. Retail segment SG&A expenses decreased $26.9 million primarily due to a decrease in acquisition, integration and other costs and litigation costs related to an arbitration award partially offset by a full year of operating expenses for Jos. A. Bank.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales decreased from 25.2% in fiscal 2014 to 25.0% in fiscal 2015. Corporate apparel segment SG&A expenses decreased $4.0 million.

Below is a table that summarizes the goodwill and other intangible asset impairment charges related to Jos. A. Bank recorded in fiscal 2015 (amounts in thousands):

Goodwill impairment charge

  $ 769,021  

Tradename impairment charge

    425,900  

Customer relationship impairment charge

    41,474  

Favorable lease impairment charge

    6,959  

Total goodwill and intangible asset impairment charges

  $ 1,243,354  

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Refer to Goodwill and Other Indefinite-Lived Intangible Assets as discussed in "Critical Accounting Polices and Estimates" and Note 3 of Notes to Consolidated Financial Statements for further details.

Non-cash asset impairment charges increased to $27.5 million in fiscal 2015 as compared to $0.3 million in fiscal 2014. The asset impairment charges in fiscal 2015 resulted primarily from our store rationalization program which identified approximately 250 stores, which are expected to close in fiscal 2016. Refer to Impairment of Long-Lived Assets as discussed in "Critical Accounting Polices and Estimates" and Note 1 of Notes to Consolidated Financial Statements for further details.

Interest expense increased to $106.0 million in fiscal 2015 from $66.0 million in fiscal 2014, an increase of $40.0 million or 60.5%, due to incremental interest incurred on borrowings entered into in connection with the Jos. A. Bank acquisition.

In fiscal 2015, our effective income tax rate was (14.1%) and is lower than the U.S. statutory rate due to our overall net loss partially offset by the non-deductibility of the goodwill impairment charge, as discussed above. Our foreign jurisdictions in which we operate had taxable income, which requires us to provide for income tax, specifically, our operations in Canada and the United Kingdom. For fiscal 2015, the statutory tax rates in Canada and the United Kingdom were approximately 27% and 20%, respectively, which negatively impacted our effective tax rate due to the loss in the U.S. For fiscal 2015, tax expense for our operations in foreign jurisdictions totaled $8.9 million.

Our income tax expense and effective income tax rate in future periods may be impacted by many factors, including our geographic mix of earnings and changes in tax laws. Currently, we expect our effective tax rate in future periods to be lower than the statutory United States combined federal and state tax rate based on the expected geographic mix of earnings.

In addition, if our financial results in fiscal 2016 generate a loss or certain deferred tax liabilities decrease, we may need to establish a valuation allowance on our U.S. deferred tax assets, which could have a material impact on our financial condition and results of operations.

These factors resulted in a net loss attributable to common shareholders of $1,026.7 million for fiscal 2015, a decrease of $1,026.3 million from a net loss of $0.4 million for fiscal 2014.

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2014 Compared with 2013

Total net sales increased $779.3 million, or 31.5%, to $3,252.5 million for fiscal 2014 as compared to fiscal 2013.

Total retail sales increased $768.8 million, or 34.5%, to $2,995.2 million for fiscal 2014 as compared to fiscal 2013 due mainly to $684.0 million of net sales from Jos. A. Bank since the date of acquisition as well as increases in retail clothing product revenues of $59.9 million and rental services revenue of $21.8 million from our other brands. The net increase is attributable to the following:

(in millions)
  Amount attributed to
$ 684.0   Increase in net sales from Jos. A. Bank.
  58.2   3.9% increase in comparable sales at Men's Wearhouse.
  19.4   8.6% increase in comparable sales at Moores(1).
  11.4   3.7% increase in comparable sales at K&G.
  16.4   Increase from net sales of stores opened in 2013, relocated stores and expanded stores not yet included in comparable sales(2).
  26.1   Increase in net sales from new stores opened in 2014(2).
  (27.1 ) Decrease in net sales resulting from closed stores.
  (16.4 ) Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
  (3.2 ) Other(2).
$ 768.8   Increase in total retail sales.

(1)
Comparable sales percentages for Moores are calculated using Canadian dollars.

(2)
Excludes Jos. A. Bank.

Comparable sales for Men's Wearhouse, Moores and K&G exclude the net sales of a store for any month of one period if the store was not open throughout the same month of the prior period and include e-commerce net sales. The inclusion of e-commerce net sales did not have a significant effect on comparable sales.

The increase at Men's Wearhouse resulted primarily from increased average unit retails and average transactions per store that more than offset decreased units sold per transaction. The increase at Moores was driven by increased average unit retails, units sold per transaction and average transactions per store. The increase at K&G was due to increased units sold per transaction and average transactions per store which more than offset a decrease in average unit retails. At Men's Wearhouse, rental service comparable sales increased 6.4% primarily due to an increase in rental rates and a slight increase in unit rentals.

Total corporate apparel clothing product sales increased $10.6 million to $257.4 million for fiscal 2014 as compared to fiscal 2013. UK corporate apparel sales increased $7.7 million due mainly to the impact of a stronger pound Sterling this year compared to last year. U.S. corporate apparel sales increased $2.9 million due primarily to increased sales from existing customer programs.

Buying and distribution costs are included in determining our retail and corporate apparel clothing product gross margins. Our gross margin may not be comparable to other specialty retailers, as some companies exclude costs related to their distribution network from cost of goods sold while others, like us, include all or a portion of such costs in cost of goods sold and exclude them from SG&A expenses. Distribution costs are not included in determining our rental services gross margin as these costs are included in SG&A expenses.

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Our total gross margin increased $269.6 million, or 24.8%, to $1,358.6 million for fiscal 2014 as compared to fiscal 2013. Total retail segment gross margin increased $266.4 million or 26.2% from fiscal 2013 to $1,281.9 million in fiscal 2014. The dollar increase in gross margin was primarily driven by $227.1 million of gross margin generated by Jos. A. Bank as well as by higher sales from our other brands. As a result of the purchase price allocation for the Jos. A. Bank acquisition, a preliminary purchase accounting adjustment of $34.4 million was recorded for the step up of inventory to its fair value. During fiscal 2014, $33.5 million of the inventory valuation step up was recognized and negatively impacted gross margin results. We expect the remaining $0.9 million of step up in inventory to be charged to cost of sales in the first half of fiscal 2015.

For the retail segment, total gross margin as a percentage of related sales decreased from 45.6% in fiscal 2013 to 42.8% in fiscal 2014 driven primarily by a lower gross margin as a percentage of sales for Jos. A. Bank, which includes the recognition of the inventory step up at Jos. A. Bank, partially offset by a higher retail clothing product gross margin rate at our other brands. In addition, retail segment gross margin was impacted by a decrease in the rental services gross margin rate primarily due to a $10.6 million charge to rationalize our rental product to allow for more productive rental styles, as well as increased royalty expenses.

Occupancy costs increased $104.6 million primarily due to Jos. A. Bank occupancy costs. Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, increased slightly from 13.1% in fiscal 2013 to 13.2% in fiscal 2014, primarily due to the impact of Jos. A. Bank's occupancy costs, which are higher as a percentage of sales than our other brands.

Corporate apparel gross margin increased $3.2 million or 4.4% from fiscal 2013 to $76.7 million in fiscal 2014. For the corporate apparel segment, total gross margin as a percentage of related sales was flat at 29.8% for both fiscal 2013 and 2014.

Advertising expense increased to $168.3 million in fiscal 2014 from $101.1 million in fiscal 2013, an increase of $67.2 million or 66.5%. The increase was primarily driven by Jos. A. Bank advertising costs as well as advertising expense related to the rollout of Joseph Abboud merchandise. As a percentage of total net sales, these expenses increased from 4.1% in fiscal 2013 to 5.2% in fiscal 2014.

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SG&A expenses increased to $1,116.8 million in fiscal 2014 from $846.6 million in fiscal 2013, an increase of $270.2 million or 31.9%. The dollar increase in SG&A expenses was driven by an increase in expenses related to acquisition, integration and other costs primarily related to Jos. A. Bank, a licensee arbitration award related to JA Holding, other cost reduction initiatives, as well as Jos. A. Bank operating expenses, which includes amortization of intangible assets recorded in connection with the Jos. A. Bank acquisition. As a percentage of total net sales, these expenses increased from 34.2% in fiscal 2013 to 34.3% in fiscal 2014. The components of the changes in SG&A expenses as a percentage of total net sales and the related dollar changes were as follows:

 
  %   in millions   Attributed to
      1.7   $ 64.9   Increase in acquisition, integration and other costs as a percentage of sales from 1.1% in fiscal 2013 to 2.8% in fiscal 2014. For fiscal 2014, these costs totaled $92.1 million, related primarily to Jos. A. Bank acquisition and integration costs and other cost reduction initiatives, partially offset by a $3.4 million favorable litigation settlement. For fiscal 2013, such costs totaled $27.2 million due to acquisition and integration costs related to JA Holding, costs related to strategic projects, separation costs associated with former executives, K&G e-commerce closure costs and a New York store related closure costs, partially offset by a gain of $2.2 million on the sale of an office building.
      1.3     42.6   $42.6 million of costs for a JA Holding license arbitration award in fiscal 2014 with no corresponding amount in the prior year.
      0.2     6.1   Increase in amortization of intangible assets as a percentage of sales from 0.1% in fiscal 2013 to 0.3% in fiscal 2014. Amortization of intangible assets in dollars increased primarily due to intangible assets recorded in connection with the Jos. A. Bank acquisition.
      (0.7 )   78.4   Decrease in store salaries as a percentage of sales from 12.9% in fiscal 2013 to 12.2% in fiscal 2014. Store salaries in dollars increased primarily due to the impact of Jos. A. Bank store salaries and higher commissions at our other brands.
      (2.4 )   78.2   Decrease in other SG&A expenses as a percentage of sales from 20.1% in fiscal 2013 to 17.7% in fiscal 2014. Other SG&A expenses in dollars increased primarily due to the inclusion of Jos. A. Bank's other SG&A expenses.
      0.1 % $ 270.2   Total

In the retail segment, SG&A expenses as a percentage of related net sales decreased from 35.2% in fiscal 2013 to 35.1% in fiscal 2014. Retail segment SG&A expenses increased $267.5 million primarily due to acquisition, integration and other costs, costs related to the JA Holding licensee arbitration award and operating expenses for Jos. A. Bank, which includes amortization of intangible assets recorded in connection with the Jos. A. Bank acquisition and other cost reduction initiatives.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales remained flat at 25.2% in both fiscal 2013 and 2014. Corporate apparel segment SG&A expenses increased $2.7 million primarily due to higher UK operating expenses driven by the impact of a stronger pound Sterling this year compared to last year.

Interest expense increased to $66.0 million in fiscal 2014 from $3.2 million in fiscal 2013 primarily due to interest expense on borrowings entered into in connection with the Jos. A. Bank acquisition.

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Our effective income tax rate increased from 33.6% for fiscal 2013 to 101.8% for fiscal 2014 primarily due to an increase in permanent items as a percent of pre-tax earnings, mainly consisting of non-deductible transaction costs related to the Jos. A. Bank acquisition, resulting in our effective tax rate being higher than the statutory United States combined federal and state tax rate. Furthermore, the foreign jurisdictions in which we operate had profitability which require us to provide for income tax, specifically, our operations in Canada and the United Kingdom. For fiscal 2014, the statutory tax rates in Canada and the United Kingdom were approximately 26% and 20%, respectively, which favorably impacted our effective tax rate. For fiscal 2014, tax expense for our operations in foreign jurisdictions totaled $11.5 million. Lastly, our effective income tax rate was also favorably impacted by amortizable goodwill related to a prior acquisition.

Thus, the combination of tax expense being recorded on U.S. activity (due mainly to the non-deductible transaction costs), and for tax expense from our foreign operations, coupled with low book income results in a high effective tax rate for fiscal 2014 compared to fiscal 2013.

Our income tax expense and effective income tax rate in future periods may be impacted by many factors, including our geographic mix of earnings and changes in tax laws. Currently, we expect our effective tax rate in future periods to be lower than the statutory United States combined federal and state tax rate based on the expected geographic mix of earnings.

These factors resulted in a net loss attributable to common shareholders of $0.4 million for fiscal 2014, a decrease of $84.2 million from net earnings of $83.8 million for fiscal 2013.

Liquidity and Capital Resources

At January 30, 2016 and January 31, 2015, cash and cash equivalents totaled $30.0 million and $62.3 million, respectively. At January 30, 2016, cash and cash equivalents held by foreign subsidiaries totaled $27.0 million. Under current tax laws and regulations, if cash and cash equivalents held outside the U.S. are repatriated to the U.S., in certain circumstances we may be subject to additional U.S. income taxes and foreign withholding taxes. We currently do not intend to repatriate amounts held by foreign subsidiaries.

We had working capital of $723.6 million and $752.3 million at January 30, 2016 and January 31, 2015, respectively. Our primary sources of working capital are cash flows from operations and available borrowings under our financing arrangements, as described below.

On June 18, 2014, we entered into a term loan credit agreement, that provides for a senior secured term loan in the aggregate principal amount of $1.1 billion (the "Term Loan"), and a $500.0 million asset-based revolving credit agreement (the "ABL Facility", and together with the Term Loan, the "Credit Facilities") with certain of our U.S. subsidiaries and Moores the Suit People Inc., one of our Canadian subsidiaries, as co-borrowers. In addition, on June 18, 2014, we issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the "Senior Notes").

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge coverage ratios, total leverage ratios and secured leverage ratios, as well as a restriction on our ability to pay dividends on our common stock in excess of $10.0 million per quarter. Since entering into these financing arrangements and as of January 30, 2016, our total leverage ratio and secured leverage ratio were above the maximums specified in the agreements, which was anticipated when we entered into these arrangements. As a result, we are currently subject to certain additional restrictions, including limitations on our ability to make acquisitions and incur additional indebtedness. As of January 30, 2016, we believe we will be in compliance with all of the non-financial and financial covenants

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by the end of fiscal 2017 which will result in the elimination of these additional restrictions. In addition, in accordance with the terms of the Credit Facilities, we have an obligation to make a mandatory excess cash flow prepayment offer of $35.5 million to the Term Loan lenders by April 29, 2016. Our lenders have the option to decline their respective portions of the prepayment.

We used the net proceeds from the Term Loan, the offering of the Senior Notes and the net proceeds from $340.0 million drawn on the ABL Facility to pay the approximately $1.8 billion purchase price for the acquisition of Jos. A. Bank and to repay all of our obligations under our Third Amended and Restated Credit Agreement, dated as of April 12, 2013 (as amended the "Previous Credit Agreement"), including $95.0 million outstanding under the Previous Credit Agreement as well as settlement of the then existing interest rate swap. The loans under the ABL Facility were subsequently repaid in full promptly following the closing of the Jos. A. Bank acquisition using the cash acquired from Jos. A. Bank.

The Term Loan is guaranteed, jointly and severally, by certain of our U.S. subsidiaries and will mature on June 18, 2021. The interest rate on the Term Loan is based on the 3-month LIBOR rate, which was approximately 0.61% at January 30, 2016. However, the Term Loan interest rate is subject to a LIBOR floor of 1% per annum, plus the applicable margin which is currently 3.50%, resulting in a total interest rate of 4.50% at January 30, 2016. To minimize the impact of changes in interest rates on our interest payments under the Term Loan, in January 2015, we entered into an interest rate swap agreement to swap variable-rate interest payments for fixed-rate interest payments on a notional amount of $520.0 million, effective in February 2015. The interest rate swap agreement matures in August 2018 and has periodic interest settlements. Under this interest rate swap agreement, we receive a floating rate based on the 3-month LIBOR rate and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount.

On April 7, 2015, we entered into Incremental Facility Agreement No. 1 (the "Incremental Agreement") resulting in a refinancing of $400.0 million aggregate principal amount of our Term Loan from a variable rate to a fixed rate of 5.0% per annum. The Incremental Agreement did not impact the total amount borrowed under the Term Loan, the maturity date of the Term Loan of June 18, 2021, or collateral and guarantees under the existing Term Loan.

As a result of the interest rate swap and the Incremental Agreement, we have converted a majority of the variable interest rate under the Term Loan to a fixed rate and, as of January 30, 2016, the Term Loan had a weighted average interest rate of 4.90%.

The ABL Facility provides for a senior secured revolving credit facility of $500.0 million, with possible future increases to $650.0 million under an expansion feature that matures on June 18, 2019 and is guaranteed, jointly and severally, by certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices: (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the federal funds effective rate plus 0.5% or adjusted LIBOR for a one-month period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 2.00%. The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.50% to 2.00%, and a fee on unused commitments which ranges from 0.25% to 0.375%. As of January 30, 2016, there were no borrowings outstanding under the ABL Facility.

The obligations under the Credit Facilities are secured on a senior basis by a first priority lien on substantially all of the assets of the Company, certain of its U.S. subsidiaries and, in the case of the ABL Facility, Moores The Suit People Inc. The Credit Facilities and the related guarantees and security interests granted thereunder are senior secured obligations of, and will rank equally with all present and future senior indebtedness of, the Company, the co-borrowers and the respective guarantors.

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We utilize letters of credit primarily to secure inventory purchases and as collateral for workers compensation claims. At January 30, 2016, letters of credit totaling approximately $25.5 million were issued and outstanding. Borrowings available under the ABL Facility as of January 30, 2016 were $420.9 million.

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by certain of our U.S. subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations of the Company and the guarantors, respectively, and will rank equally with all of the Company's and each guarantor's present and future senior indebtedness. The Senior Notes will mature on July 1, 2022. Interest on the Senior Notes are payable on January 1 and July 1 of each year. Payments began January 1, 2015.

We may redeem some or all of the Senior Notes at any time on or after July 1, 2017 at the redemption prices set forth in the indenture governing the Senior Notes. At any time prior to July 1, 2017, we will have the option to redeem some or all of the Senior Notes at a redemption price of 100% of the principal amount of the Senior Notes to be redeemed, plus a "make-whole" premium and accrued and unpaid interest, if any, to the date of redemption. We may also redeem up to a maximum of 35% of the original aggregate principal amount of the Senior Notes with the proceeds of certain equity offerings prior to July 1, 2017 at a redemption price of 107% of the principal amount of the Senior Notes plus accrued and unpaid interest, if any. Upon the occurrence of certain specific changes of control, we may be required to offer to purchase the Senior Notes at 101% of their aggregate principal amount plus accrued and unpaid interest thereon to the date of purchase.

We had entered into a registration rights agreement regarding the Senior Notes pursuant to which we agreed, among other things, to use our commercially reasonable efforts to consummate an exchange offer of the Senior Notes for substantially identical notes registered under the Securities Act of 1933, as amended, on or before July 13, 2015. On June 24, 2015, the exchange offer was completed.

Net cash provided by operating activities was $131.7 million and $94.8 million for 2015 and 2014, respectively. The $36.9 million increase was driven by higher net earnings, after adjusting for non-cash items including goodwill, intangible and other asset impairment charges, partially offset by the impact of working capital items. Unfavorable changes in working capital include an increase in inventories, primarily due to higher inventory levels from lower sales and increased purchases of rental product partially offset by favorable fluctuations in accounts payable, accrued expenses and other current liabilities.

Net cash provided by operating activities was $94.8 million and $188.9 million for 2014 and 2013, respectively. The $94.1 million decrease is primarily the result of a decrease in net earnings driven by acquisition and integration costs related to Jos. A. Bank, interest expense on our indebtedness, and an arbitration award related to JA Holding, as well as changes in working capital, primarily related to fluctuations in accounts payable, accrued expenses and other current liabilities.

Net cash used in investing activities was $112.9 million and $1,587.7 million for 2015 and 2014, respectively. The $1,474.8 million decrease was primarily driven by last year's acquisition of Jos. A. Bank. The increase in capital expenditures in 2015 compared to 2014 was primarily due to integration projects for Jos. A. Bank as well as store remodels, openings and/or relocations.

Net cash used in investing activities was $1,587.7 million and $199.0 million for 2014 and 2013, respectively. The $1,388.7 million increase in cash used in investing activities was primarily driven by the acquisition of Jos. A. Bank. Our capital expenditures in 2014 and 2013 relate to costs incurred for stores opened,

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remodeled or relocated during the year or under construction at the end of the year and infrastructure technology, office and distribution facility investments.

Net cash used in financing activities was $46.8 million for 2015 compared to net cash provided by financing activities of $1,500.9 million for 2014. The net change of $1,547.7 million was primarily driven by last year's proceeds on our Term Loan and issuance of Senior Notes for the acquisition of Jos. A. Bank.

Net cash provided by financing activities was $1,500.9 million for 2014 compared to net cash used in financing activities of $82.9 million for 2013. The net change of $1,583.8 million was primarily driven by borrowings on our Term Loan and issuance of the Senior Notes for the acquisition of Jos. A. Bank. Cash outflows from financing activities consist primarily of repayment of borrowings under our ABL Facility and previous term loan, payment of deferred financing costs related to our Credit Facilities and cash dividend payments.

Share repurchase program—In March 2013, the Board of Directors (the "Board") approved a $200.0 million share repurchase program for our common stock, which amended and replaced our then existing share repurchase program authorized by the Board in January 2011. At January 30, 2016, the remaining balance available under the Board's March 2013 authorization was $48.0 million. During fiscal 2015, no shares were repurchased in open market transactions under the Board's March 2013 authorization.

In July 2013, we entered into an accelerated share repurchase agreement ("ASR Agreement") with J.P. Morgan Securities LLC ("JPMorgan"), as agent for JPMorgan Chase Bank, National Association, London Branch, to purchase $100.0 million of our common stock. A total of 2,653,287 shares were repurchased under the ASR Agreement and immediately retired. In addition to the ASR Agreement, during fiscal 2013, 1,489,318 shares at a cost of $52.0 million were repurchased in open market transactions under the Board's March 2013 authorization.

The following table summarizes our common stock repurchases during fiscal 2015, 2014 and 2013 (in thousands, except share data and average price per share):

 
  Fiscal Year  
 
  2015   2014   2013  

Shares repurchased(1)

    5,799     5,349     4,147,983  

Total costs

  $ 277   $ 251   $ 152,129  

Average price per share

  $ 47.82   $ 46.93   $ 36.68  

(1)
Includes 5,799, 5,349 and 5,378 shares, respectively, repurchased in private transactions to satisfy minimum tax withholding obligations arising upon the vesting of certain restricted stock.

Dividends—Cash dividends paid were approximately $35.0 million, $34.8 million and $35.5 million during fiscal 2015, 2014 and 2013, respectively. In fiscal 2015, 2014 and 2013, a dividend of $0.18 per share was declared in each quarter, for an annual dividend of $0.72 per share, respectively. The cash dividend of $0.18 per share declared by the Board in January 2016 is payable on March 25, 2016 to shareholders of record on March 15, 2016.

Our primary uses of cash are to finance working capital requirements of our operations and to repay our indebtedness. In addition, we will use cash to fund capital expenditures, income taxes, integration costs associated with Jos. A. Bank, costs related to our store rationalization and profit improvement programs

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including lease termination payments, dividend payments, operating leases and various other commitments and obligations, as they arise.

Capital expenditures are anticipated to be in the range of $110.0 to $120.0 million for 2016. This amount includes the anticipated costs to open 166 shops within Macy's stores, 15 to 20 Men's Wearhouse stores, three Moores stores, two Jos. A. Bank stores and two K&G stores and to expand and/or relocate approximately 8 to 12 existing Men's Wearhouse stores, four to eight existing Jos. A. Bank stores and one existing K&G store. The average cost (excluding telecommunications and point-of-sale equipment and inventory) of opening a new store, which does not include shops within Macy's stores, is expected to be approximately $0.5 million in 2016. The balance of the capital expenditures for 2016 will be used for integration projects related to Jos. A. Bank, distribution facilities, point-of-sale and other computer equipment and systems, store remodeling, and investment in other corporate assets. The actual amount of future capital expenditures will depend in part on the number of new stores opened and the terms on which new stores are leased and the timing of our Jos. A. Bank integration projects, as well as on industry trends consistent with our anticipated operating plans.

Additionally, market conditions may produce attractive opportunities for us to make acquisitions. Any such acquisitions may be undertaken as an alternative to opening new stores. We may use cash on hand, together with cash flow from operations, borrowings under our Credit Facilities and issuances of debt or equity securities, to take advantage of any acquisition opportunities.

Current and future domestic and global economic conditions could negatively affect our future operating results as well as our existing cash and cash equivalents balances. In addition, conditions in the financial markets could limit our access to further capital resources, if needed, and could increase associated costs. We believe based on our current business plan that our existing cash and cash flows from operations and availability under our ABL Facility will be sufficient to fund our operating cash requirements, repayment of current indebtedness, planned store openings, relocations and remodels, other capital expenditures, and integration costs associated with Jos. A. Bank.

Contractual Obligations

As of January 30, 2016, we are obligated to make cash payments in connection with our long-term debt, non-cancelable operating leases and other contractual obligations in the amounts listed below. In addition, we utilize letters of credit primarily for inventory purchases and as collateral for workers compensation claims. At January 30, 2016, letters of credit totaling approximately $25.5 million were issued and outstanding.

 
  Payments Due by Period  
(In millions)
Contractual obligations
  Total   <1 Year   1 - 3 Years   4 - 5 Years   > 5 Years  

Long-term debt(1)

  $ 2,242.8   $ 137.3   $ 212.3   $ 181.4   $ 1,711.8  

Operating lease base rentals(2)

    1,279.5     261.1     416.7     291.9     309.8  

Other contractual obligations(3)

    158.0     25.7     33.5     27.9     70.9  

Total contractual obligations(4)

  $ 3,680.3   $ 424.1   $ 662.5   $ 501.2   $ 2,092.5  

(1)
Includes interest payments of $94.8 million within one year, $196.5 million between one and three years, $169.1 million between four and five years and $93.1 million beyond five years, at current interest rates including the impact of active interest rate swaps. The payments due by period do not consider amounts which may become payable under the excess cash flow provision of our Term Loan. See Notes 6 and 16 of Notes to Consolidated Financial Statements for additional information.

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(2)
We lease retail business locations, office and warehouse facilities and equipment under various non-cancelable operating leases. See Note 18 of Notes to Consolidated Financial Statements for additional information.

(3)
Other contractual obligations consist primarily of minimum payments under our agreement with Macy's to operate shops within Macy's stores, our agreement with Vera Wang that gives us the exclusive right to "Black by Vera Wang" tuxedo products, our partnership with Kenneth Cole and our marketing agreement with David's Bridal, Inc. Pursuant to our marketing agreement with David's Bridal, Inc., there are performance conditions that may impact future payments. These potential future payments are not included in the table above as such amounts are not readily determinable.

(4)
Excluded from the table above is $22.0 million related to uncertain tax positions. These amounts are not included due to our inability to predict the timing of the settlement of these amounts. Refer to Note 7 of Notes to Consolidated Financial Statements for additional information.

In the normal course of business, we issue purchase orders to vendors/suppliers for merchandise. The purchase orders represent executory contracts requiring performance by the vendors/suppliers, including the delivery of the merchandise prior to a specified cancellation date and compliance with product specifications, quality standards and other requirements. In the event of the vendor's failure to meet the agreed upon terms and conditions, we may cancel the order.

Off-Balance Sheet Arrangements

Other than the non-cancelable operating leases, other contractual obligations and letters of credit discussed above, we do not have any off-balance sheet arrangements that are material to our financial position or results of operations.

Inflation

We believe the impact of inflation on the results of operations during the periods presented has been minimal. However, there can be no assurance that our business will not be affected by inflation in the future.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires the appropriate application of accounting policies in accordance with generally accepted accounting principles. In many instances, this also requires management to make estimates and assumptions about future events that affect the amounts and disclosures included in our financial statements. We base our estimates on historical experience and various assumptions that we believe are reasonable under our current business model. However, because future events and conditions and their effects cannot be determined with certainty, actual results will differ from our estimates and such differences could be material to our financial statements.

Our accounting policies are described in Note 1 of Notes to Consolidated Financial Statements. We consistently apply these policies and periodically evaluate the reasonableness of our estimates in light of actual events. Historically, we have found our accounting policies to be appropriate and our estimates and assumptions reasonable. Our critical accounting policies, which are those most significant to the presentation of our financial position and results of operations and those that require significant judgment or complex estimates by management, are discussed below.

Revenue Recognition—Clothing product revenue is recognized at the time of sale and delivery of merchandise, net of actual sales returns and a provision for estimated sales returns. For e-commerce sales, revenue is recognized at the time we estimate the customer receives the product, which incorporates shipping terms and estimated delivery times. Revenues from rental, alteration and other services are recognized upon completion of the services. Amounts related to shipping and handling revenues billed to customers are recorded in net sales, and the related shipping and handling costs are recorded in cost of sales.

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We present all non-income government-assessed taxes (sales, use and value added taxes) collected from our customers and remitted to governmental agencies on a net basis (excluded from net sales) in our consolidated financial statements. The government-assessed taxes are recorded in accrued expenses and other current liabilities until they are remitted to the government agency.

Inventories—Our inventory is carried at the lower of cost or market. Cost is determined based on the average cost method. Our inventory cost also includes estimated buying and distribution costs (warehousing, freight, hangers and merchandising costs) associated with the inventory, with the balance of such costs included in cost of sales. Buying and distribution costs are allocated to inventory based on the ratio of annual product purchases to inventory cost. If this ratio were to change significantly, it could materially affect the amount of buying and distribution costs included in cost of sales. We make assumptions, based primarily on historical experience, as to items in our inventory that may be damaged, obsolete or salable only at marked down prices to reflect the market value of these items. If actual damages, obsolescence or market demand is significantly different from our estimates, additional inventory write-downs could be required.

Impairment of Long-Lived Assets—Long-lived assets, such as property and equipment and identifiable intangibles with finite useful lives, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets are grouped and evaluated for impairment at the lowest level of which there are identifiable cash flows, which is generally at a store level. Assets are reviewed using factors including, but not limited to, our future operating plans and projected cash flows. The determination of whether impairment has occurred is based on an estimate of undiscounted future cash flows directly related to the assets, compared to the carrying value of the assets. If the sum of the undiscounted future cash flows of the assets does not exceed the carrying value of the assets, full or partial impairment may exist. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined using an income approach, which requires discounting the estimated future cash flows associated with the asset. Estimating future cash flows requires management to make assumptions and to apply judgment, including forecasting future sales, costs and useful lives of assets. Significant judgment is also involved in selecting the appropriate discount rate to be applied in determining the estimated fair value of an asset. Changes to our key assumptions related to future performance, market conditions and other economic factors can significantly affect our impairment evaluation and result in future impairment charges. For example, unanticipated long-term adverse market conditions can cause individual stores to become unprofitable and can result in an impairment charge for the property and equipment assets in those stores. See Notes 1 and 3 to the consolidated financial statements for additional information.

Business Combinations-Purchase Price Allocation—For the Jos. A. Bank acquisition, we allocated the purchase price to the various tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values, which were finalized as of August 1, 2015. Determining the fair value of certain assets and liabilities acquired is subjective in nature and often involves the use of significant estimates and assumptions, which are inherently uncertain. Many of the estimates and assumptions used to determine fair values, such as those used for intangible assets are made based on forecasted information and discount rates. In addition, the judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations.

Goodwill and Other Indefinite-Lived Intangible Assets—Goodwill and other indefinite-lived intangible assets are initially recorded at their fair values. Identifiable intangible assets with an indefinite useful life, including goodwill, are not amortized but are evaluated annually as for impairment. A more frequent evaluation is performed if events or circumstances indicate that impairment could have occurred. Such events or circumstances could include, but are not limited to, significant negative industry or economic

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trends, unanticipated changes in the competitive environment, decisions to significantly modify or dispose of operations and a significant sustained decline in the market price of our stock.

During fiscal 2015, we changed the date of our annual impairment assessment from the last day of our fiscal year to the last day of the second month of our fiscal fourth quarter. The change in date had no impact on our fiscal 2015 annual impairment test as both the new and old testing dates are within the same fiscal quarter. We changed the assessment date to allow for more time to complete the impairment assessment process before our fiscal year end.

For purposes of our goodwill impairment evaluation, the reporting units are our operating brands identified in Note 17 of Notes to Consolidated Financial Statements. Goodwill has been assigned to the reporting units based on prior business combinations related to the brands. The goodwill impairment evaluation is performed in two steps.

In our step one process, we estimate the fair value of our reporting units using a combined income and market comparable approach. Our income approach uses projected future cash flows that are discounted using a weighted-average cost of capital analysis that reflects current market conditions. The market comparable approach primarily considers market price multiples of comparable companies and applies those price multiples to certain key drivers of the reporting unit.

Management judgment is a significant factor in the goodwill impairment evaluation process. The computations require management to make estimates and assumptions. Actual values may differ significantly from these judgments, particularly if there are significant adverse changes in the operating environment for our reporting units. Critical assumptions that are used as part of these evaluations include:

As discussed above, the fair values of reporting units in 2015 were determined using a combined income and market comparable approach. We believe these two approaches are appropriate valuation techniques and we generally weight the two values equally as an estimate of reporting unit fair value for the purposes of our impairment testing. However, we may weigh one value more heavily than the other when conditions merit doing so. The fair value derived from the weighting of these two methods provided appropriate

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valuations that, in aggregate, reasonably reconciled to our market capitalization, taking into account observable control premiums.

The goodwill impairment evaluation process requires management to make estimates and assumptions with regard to the fair value of reporting units. Actual values may differ significantly from these judgments, particularly if there are significant adverse changes in the operating environment for our reporting units. Sustained declines in our market capitalization could also increase the risk of goodwill impairment. Such occurrences could result in future goodwill impairment charges that would, in turn, negatively impact our results of operations. However, any such goodwill impairments would be non-cash charges that would not affect our cash flows or compliance with our debt covenants.

Indefinite-lived intangible assets are not subject to amortization but are reviewed at least annually for impairment. The indefinite-lived intangible asset impairment evaluation is performed by comparing the fair value of the indefinite-lived intangible assets to their carrying values. We estimate the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This approach is dependent upon a number of factors, including estimates of future growth and trends, royalty rates, discount rates and other variables. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain.

As a result of our annual impairment evaluation, it was determined that the entire carrying amount of Jos. A. Bank's goodwill was impaired, resulting in a non-cash pre-tax goodwill impairment charge of $769.0 million. Although the goodwill impairment charge negatively impacted our results of operations, as the impairment charge is non-cash, it does not affect our cash flows or compliance with our debt covenants. As of January 30, 2016, we believe that all of our other reporting units have fair values that significantly exceed their carrying values and, therefore, no other reporting units are currently deemed "at risk" for goodwill impairment.

During 2015, we recognized non-cash pre-tax impairment losses of $425.9 million related to the Jos. A. Bank tradename. After giving effect to these impairment charges, the carrying value of the Jos. A. Bank tradename was $113.2 million as of January 30, 2016.

Rental Product—The cost of our rental product is amortized to cost of sales based on the cost of each unit rented, which is estimated based on the number of times the unit is expected to be rented and the average cost of the rental product. Lost, damaged and retired rental product is also charged to cost of sales. Rental product is amortized to expense generally over a four year period. We make assumptions, based primarily on historical experience, as to the number of times each unit can be rented. If the actual number of times a unit can be rented were to vary significantly from our estimates, it could materially affect the amount of rental product amortization included in cost of sales.

Income Taxes—Income taxes are accounted for using the asset and liability method. Deferred tax liabilities or assets are established for temporary differences between financial and tax reporting bases and are subsequently adjusted to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse. The deferred tax assets are reduced, if necessary, by a valuation allowance if the future realization of those tax benefits is not more likely than not.

Significant judgment is required in determining the provision for income taxes, related taxes payable and deferred tax assets and liabilities since, in the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, our tax returns are subject to audit by various domestic and foreign tax authorities that could result in material adjustments or differing interpretations of the tax laws. Although we believe that our estimates are reasonable and are based on the best available information at the time we prepare the provision, actual results could differ from these

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estimates resulting in a final tax outcome that may be materially different from that which is reflected in our consolidated financial statements.

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Additionally, interest and/or penalties related to uncertain tax positions are recognized in income tax expense. Significant judgment is required in determining our uncertain tax positions. We have established reserves for uncertain tax positions using our best judgment and adjust these reserves, as warranted, due to changing facts and circumstances. A change in our uncertain tax positions, in any given period, could have a significant impact on our financial position, results of operations and cash flows for that period.

Recent Accounting Pronouncements

Except as discussed in Note 1 of Notes to Consolidated Financial Statements, we have considered all new accounting pronouncements and have concluded that there are no new pronouncements that may have a material impact on our results of operations, financial condition, or cash flows, based on current information.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We are subject to exposure from fluctuations in U.S. dollar/Euro exchange rates, U.S. dollar/pound Sterling ("GBP") exchange rates and U.S. dollar/Canadian dollar ("CAD") exchange rates as a result of our direct sourcing programs and our operations in foreign countries. Our UK-based operations in particular are subject to exposure from fluctuations in U.S. dollar/GBP exchange rates as Dimensions and Alexandra sell their products and conduct their business primarily in GBP but purchase most of their merchandise in transactions paid in U.S. dollars or Euros.

As further described in Note 16 of Notes to Consolidated Financial Statements, our risk management policy is to hedge a portion of forecasted merchandise purchases for our direct sourcing programs that bear foreign exchange risk using foreign exchange forward contracts. We have not elected to apply hedge accounting to these transactions denominated in a foreign currency. A hypothetical 10% increase or decrease in applicable January 30, 2016 forward rates could impact the fair value of the derivative financial instruments by $1.1 million. However, it should be noted that any change in the value of these contracts, whether real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged item.

Dimensions and Alexandra, our UK-based operations, sell their products and conduct their business primarily in GBP but purchase most of their merchandise in transactions paid in U.S. dollars or Euros. The exchange rate between the GBP, Euro and U.S. dollar has fluctuated historically. A decline in the value of the GBP as compared to the Euro or U.S. dollar will adversely impact our UK operating results as the cost of merchandise purchases will increase, particularly in relation to longer term customer contracts that have little or no pricing adjustment provisions, and the revenues and earnings of our UK operations will be reduced when they are translated to U.S. dollars. Also, the value of our UK net assets in U.S. dollars may decline. Dimensions and Alexandra may, from time to time, utilize foreign currency hedging contracts as well as price renegotiations to limit exposure to some of this risk; however these activities may not adequately protect our UK operations from exchange rate risk.

Moores, our Canadian subsidiary, conducts most of its business in CAD but purchases a significant portion of its merchandise in U.S. dollars. The exchange rate between CAD and U.S. dollars has fluctuated

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historically. Recently, the the value of the CAD against the U.S. dollar has weakened. If this valuation does not improve, then the revenues and earnings of our Canadian operations will be reduced when they are translated to U.S. dollars. Also, the value of our Canadian net assets in U.S. dollars may decline. Moores utilizes foreign currency hedging contracts related to its merchandise purchases to limit exposure to changes in U.S. dollar/CAD exchange rates; however, these hedging activities may not adequately protect our Canadian operations from exchange rate risk.

Interest Rate Risk

In conjunction with the Jos. A. Bank acquisition, we entered into new financing arrangements and repaid amounts existing under our Previous Credit Agreement. For further information, refer to Note 6 of Notes to Consolidated Financial Statements. Borrowings under our Credit Facilities generally bear interest at a rate based on LIBOR plus an applicable margin. As such, our Credit Facilities expose us to market risk for changes in interest rates.

Certain terms of our Term Loan limit our exposure to short-term interest rate fluctuations, specifically the existence of a LIBOR floor of 1% per annum. Assuming LIBOR rates surpassed the 1% LIBOR floor provision on our Term Loan, we would be exposed to interest rate risk on such Term Loan. At January 30, 2016, the 3-month LIBOR rate was approximately 0.61%, which is significantly below the LIBOR floor. However, to partially mitigate future interest rate risk, in January 2015, we entered into an interest rate swap agreement to exchange variable interest rate payments for fixed interest rate payments for a portion of the outstanding Term Loan balance, effective in February 2015. In addition in April 2015 we refinanced $400.0 million aggregate principal of our Senior Notes from a variable rate to a fixed rate of 5.0%. After consideration of the swap and refinancing, each one percentage point change in interest rates would result in an approximate $2.4 million change in annual interest expense on our Term Loan.

We also have exposure to market rate risk for changes in interest rates as those rates relate to our investment portfolio. The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. As of January 30, 2016, we have highly liquid investments classified as cash equivalents in our consolidated balance sheet. Future investment income earned on our cash equivalents will fluctuate in line with short-term interest rates.

As the foreign exchange forward contracts and interest rate swap agreement are with financial institutions, we are exposed to credit risk in the event of nonperformance by these parties. However, due to the creditworthiness of these major financial institutions, full performance is anticipated.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Tailored Brands, Inc. (successor reporting company to The Men's Wearhouse, Inc.)
Houston, Texas

We have audited the accompanying consolidated balance sheets of Tailored Brands, Inc. (successor reporting company to The Men's Wearhouse, Inc.) and subsidiaries (the "Company") as of January 30, 2016 and January 31, 2015, and the related consolidated statements of (loss) earnings, comprehensive (loss) income, shareholders' (deficit) equity, and cash flows for each of the three years in the period ended January 30, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Tailored Brands, Inc. (successor reporting company to The Men's Wearhouse, Inc.) and subsidiaries as of January 30, 2016 and January 31, 2015, and the results of their operations and their cash flows for each of the three years in the period ended January 30, 2016, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of January 30, 2016, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 25, 2016 expressed an unqualified opinion on the Company's internal control over financial reporting.

    /s/ DELOITTE & TOUCHE LLP

Houston, Texas
March 25, 2016

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

 
  January 30,
2016
  January 31,
2015
 

ASSETS

             

CURRENT ASSETS:

             

Cash and cash equivalents

  $ 29,980   $ 62,261  

Accounts receivable, net

    63,890     73,266  

Inventories

    1,022,504     938,336  

Other current assets

    143,546     169,809  

Total current assets

    1,259,920     1,243,672  

PROPERTY AND EQUIPMENT, AT COST:

             

Land

    20,710     20,921  

Buildings

    130,719     123,762  

Leasehold improvements

    590,562     589,105  

Furniture, fixtures and equipment

    603,047     575,983  

    1,345,038     1,309,771  

Less accumulated depreciation and amortization

    (823,214 )   (743,697 )

Net property and equipment

    521,824     566,074  

RENTAL PRODUCT, net

    157,460     132,672  

GOODWILL

    118,586     887,936  

INTANGIBLE ASSETS, net

    178,510     668,259  

OTHER ASSETS

    8,019     9,599  

TOTAL ASSETS

  $ 2,244,319   $ 3,508,212  

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

             

CURRENT LIABILITIES:

             

Accounts payable

  $ 237,114   $ 209,867  

Accrued expenses and other current liabilities

    255,589     268,935  

Income taxes payable

    1,173     1,609  

Current portion of long-term debt

    42,451     11,000  

Total current liabilities

    536,327     491,411  

LONG-TERM DEBT, net

   
1,613,473
   
1,637,686
 

DEFERRED TAXES AND OTHER LIABILITIES

    194,605     409,326  

Total liabilities

    2,344,405     2,538,423  

COMMITMENTS AND CONTINGENCIES

             

SHAREHOLDERS' (DEFICIT) EQUITY:

   
 
   
 
 

Preferred stock, $.01 par value, 2,000,000 shares authorized, no shares issued

         

Common stock, $.01 par value, 100,000,000 shares authorized, 48,567,245 and 48,265,902 shares issued

    485     482  

Capital in excess of par

    455,765     440,907  

(Accumulated deficit) retained earnings

    (524,876 )   537,263  

Accumulated other comprehensive loss

    (28,486 )   (5,671 )

Treasury stock, 120,291 and 129,095 shares at cost

    (2,974 )   (3,192 )

Total (deficit) equity

    (100,086 )   969,789  

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

  $ 2,244,319   $ 3,508,212  

   

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

For the Years Ended
January 30, 2016, January 31, 2015, and February 1, 2014

(In thousands, except per share amounts)

 
  Fiscal Year  
 
  2015   2014   2013  

Net sales:

                   

Retail clothing product

  $ 2,599,934   $ 2,365,463   $ 1,667,535  

Rental services

    443,290     442,866     411,864  

Alteration and other services

    209,250     186,843     147,023  

Total retail sales

    3,252,474     2,995,172     2,226,422  

Corporate apparel clothing product

    243,797     257,376     246,811  

Total net sales

    3,496,271     3,252,548     2,473,233  

Cost of sales:

   
 
   
 
   
 
 

Retail clothing product

    1,160,323     1,098,550     741,957  

Rental services

    76,726     84,978     64,308  

Alteration and other services

    145,852     134,227     113,729  

Occupancy costs

    455,486     395,521     290,896  

Total retail cost of sales

    1,838,387     1,713,276     1,210,890  

Corporate apparel clothing product

    173,461     180,658     173,333  

Total cost of sales

    2,011,848     1,893,934     1,384,223  

Gross margin:

   
 
   
 
   
 
 

Retail clothing product

    1,439,611     1,266,913     925,578  

Rental services

    366,564     357,888     347,556  

Alteration and other services

    63,398     52,616     33,294  

Occupancy costs

    (455,486 )   (395,521 )   (290,896 )

Total retail gross margin

    1,414,087     1,281,896     1,015,532  

Corporate apparel clothing product

    70,336     76,718     73,478  

Total gross margin

    1,484,423     1,358,614     1,089,010  

Advertising expense

   
204,985
   
168,266
   
101,083
 

Selling, general and administrative expenses

    1,085,900     1,116,836     846,582  

Goodwill and intangible asset impairment charges

    1,243,354         11,349  

Asset impairment charges

    27,480     302     368  

Operating (loss) income

    (1,077,296 )   73,210     129,628  

Interest income

   
187
   
356
   
385
 

Interest expense

    (105,977 )   (66,032 )   (3,205 )

Loss on extinguishment of debt

    (12,675 )   (2,158 )    

(Loss) earnings before income taxes

    (1,195,761 )   5,376     126,808  

(Benefit) provision for income taxes

    (169,042 )   5,471     42,591  

Net (loss) earnings including non-controlling interest

    (1,026,719 )   (95 )   84,217  

Net earnings attributable to non-controlling interest

        (292 )   (426 )

Net (loss) earnings attributable to common shareholders

  $ (1,026,719 ) $ (387 ) $ 83,791  

Net (loss) earnings per common share attributable to common shareholders:

                   

Basic

  $ (21.26 ) $ (0.01 ) $ 1.71  

Diluted

  $ (21.26 ) $ (0.01 ) $ 1.70  

Weighted-average common shares outstanding:

                   

Basic

    48,288     47,899     48,849  

Diluted

    48,288     47,899     49,162  

   

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

For the Years Ended

January 30, 2016, January 31, 2015 and February 1, 2014

(In thousands)

 
  For the Fiscal Year Ended  
 
  2015   2014   2013  

Net (loss) earnings including non-controlling interest

  $ (1,026,719 ) $ (95 ) $ 84,217  

Currency translation adjustments

    (22,427 )   (31,942 )   (8,606 )

Unrealized loss on cash flow hedge, net of tax

    (342 )   (1,266 )   (399 )

Adjustment to minimum pension liability, net of tax

    (46 )   226      

Comprehensive (loss) income including non-controlling interest          

    (1,049,534 )   (33,077 )   75,212  

Comprehensive income attributable to non-controlling interest:

                   

Net earnings

        (292 )   (426 )

Currency translation adjustments

            (608 )

Amounts attributable to non-controlling interest

        (292 )   (1,034 )

Comprehensive (loss) income attributable to common shareholders

  $ (1,049,534 ) $ (33,369 ) $ 74,178  

   

The accompanying notes are an integral part of these consolidated financial statements.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY

(In thousands, except shares)

 
  Common
Stock
  Capital
in Excess
of Par
  (Accumulated
Deficit)
Retained
Earnings
  Accumulated
Other
Comprehensive
(Loss)
Income
  Treasury
Stock, at
Cost
  Total (Deficit)
Equity
Attributable
to Common
Shareholders
  Non-
controlling
Interest
  Total
(Deficit)
Equity
 

BALANCES—February 2, 2013

  $ 725   $ 386,254   $ 1,190,246   $ 36,924   $ (517,894 ) $ 1,096,255   $ 12,980   $ 1,109,235  

Net earnings

            83,791             83,791     426     84,217  

Other comprehensive (loss) income

                (9,613 )       (9,613 )   608     (9,005 )

Cash dividends—$0.72 per share

            (35,252 )           (35,252 )       (35,252 )

Share-based compensation

        17,120                 17,120         17,120  

Common stock issued under share-based award plans and to stock discount plan—719,551 shares

    7     10,732                 10,739         10,739  

Tax payments related to vested deferred stock units

        (3,865 )               (3,865 )       (3,865 )

Tax benefit related to share-based plans

        1,664                 1,664         1,664  

Treasury stock reissued—11,761 shares

        138             287     425         425  

Repurchases of common stock—4,147,983 shares

    (27 )       (99,973 )       (52,129 )   (152,129 )       (152,129 )

Retirement of treasury stock—22,915,087 shares

    (229 )       (566,100 )       566,329              

BALANCES—February 1, 2014

    476     412,043     572,712     27,311     (3,407 )   1,009,135     14,014     1,023,149  

Net (loss) earnings

            (387 )           (387 )   292     (95 )

Other comprehensive loss

                (32,982 )       (32,982 )       (32,982 )

Purchase of non-controlling interest

        7,249                 7,249     (14,306 )   (7,057 )

Cash dividends—$0.72 per share

            (34,809 )           (34,809 )       (34,809 )

Share-based compensation

        16,513                 16,513         16,513  

Common stock issued under share-based award plans and to stock discount plan—569,522 shares

    6     8,076                 8,082         8,082  

Tax payments related to vested deferred stock units

        (6,940 )               (6,940 )       (6,940 )

Tax benefit related to share-based plans

        3,736                 3,736         3,736  

Treasury stock reissued—8,805 shares

        230             213     443         443  

Repurchases of common stock—5,349 shares

            (251 )           (251 )       (251 )

Retirement of treasury stock—100 shares

            (2 )       2              

BALANCES—January 31, 2015

    482     440,907     537,263     (5,671 )   (3,192 )   969,789   $     969,789  

Net loss

            (1,026,719 )           (1,026,719 )       (1,026,719 )

Other comprehensive loss

                (22,815 )       (22,815 )       (22,815 )

Cash dividends—$0.72 per share

            (35,143 )           (35,143 )       (35,143 )

Share-based compensation

        14,839                 14,839         14,839  

Common stock issued under share-based award plans and to stock discount plan—307,142 shares

    3     2,971                 2,974         2,974  

Tax payments related to vested deferred stock units

        (4,538 )               (4,538 )       (4,538 )

Tax benefit related to share-based plans

        1,456                 1,456         1,456  

Repurchases of common stock—5,799 shares

            (277 )           (277 )       (277 )

Treasury stock reissued—8,804 shares

        130             218     348         348  

BALANCES—January 30, 2016

  $ 485   $ 455,765   $ (524,876 ) $ (28,486 ) $ (2,974 ) $ (100,086 ) $   $ (100,086 )

   

The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents


TAILORED BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended
January 30, 2016, January 31, 2015 and February 1, 2014

(In thousands)

 
  Fiscal Year  
 
  2015   2014   2013  

CASH FLOWS FROM OPERATING ACTIVITIES:

                   

Net (loss) earnings including non-controlling interest

  $ (1,026,719 ) $ (95 ) $ 84,217  

Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:

                   

Depreciation and amortization

    132,329     112,659     88,749  

Rental product amortization

    34,592     34,424     32,266  

Amortization of deferred financing costs

    6,817     4,903     523  

Amortization of discount on long-term debt

    1,098     982      

Loss on extinguishment of debt

    12,675     2,158      

Loss on disposition of assets

    3,548     12,328     158  

Goodwill and intangible asset impairment charges

    1,243,354         11,349  

Asset impairment charges

    27,480     302     368  

Share-based compensation

    14,839     16,513     17,120  

Excess tax benefits from share-based plans

    (1,584 )   (3,766 )   (2,145 )

Deferred tax (benefit) provision

    (184,841 )   (13,107 )   2,272  

Deferred rent expense and other

    4,066     4,233     2,884  

Changes in operating assets and liabilities:

                   

Accounts receivable

    8,165     (6,151 )   14,517  

Inventories

    (94,889 )   (26,586 )   (39,342 )

Rental product

    (65,866 )   (37,185 )   (50,577 )

Other assets

    (8,815 )   (19,250 )   (6,339 )

Accounts payable, accrued expenses and other current liabilities           

    22,953     3,831     34,514  

Income taxes payable

    289     6,135     (2,713 )

Other liabilities

    2,206     2,436     1,109  

Net cash provided by operating activities

    131,697     94,764     188,930  

CASH FLOWS FROM INVESTING ACTIVITIES:

                   

Capital expenditures

    (115,498 )   (96,420 )   (108,200 )

Acquisition of businesses, net of cash

        (1,491,393 )   (94,906 )

Proceeds from sales of property and equipment

    2,617     160     4,127  

Net cash used in investing activities

    (112,881 )